The Japanese yen rose in Asian trading on Monday against a basket of major and minor currencies, extending its gains for a third consecutive session against the US dollar and marking its highest level in two weeks. The currency continued to benefit from persistent weakness in the US dollar amid rising expectations of a Federal Reserve rate cut.

The advance was also supported by comments from Bank of Japan Governor Kazuo Ueda, who kept the door open for near-term policy normalization, boosting the likelihood of a rate hike in Japan this December.

Price overview

• USD/JPY today: The dollar fell 0.4% against the yen to ¥155.41, its lowest level since 19 November, down from an opening rate of ¥156.05. The session high was ¥156.15.

• The yen ended Friday’s session up 0.1% against the dollar, posting its second straight daily gain as safe-haven demand increased.

• Over the month of November, the yen lost 1.4% against the dollar, its third consecutive monthly decline, driven by concerns over Prime Minister Sanae Takaichi’s stimulus plans.

US dollar

The US Dollar Index fell around 0.2% on Monday, deepening losses for a sixth straight session and hitting a two-week low, reflecting continued weakness in the US currency against a basket of global peers.

A series of weak US economic data and cautious commentary from Federal Reserve officials have pushed expectations higher for a rate cut in December, with markets awaiting key labor-market releases throughout this week.

Kazuo Ueda

Bank of Japan Governor Kazuo Ueda on Monday delivered a more optimistic outlook for the Japanese economy, stating that the central bank will weigh the pros and cons of raising interest rates at its upcoming December policy meeting.

Analysis and commentary

Christopher Wong, currency strategist at OCBC, said the latest signaling “appears to be a pre-emptive setup for a potential rate hike, making a December or January move highly plausible.”

Wong added: “The key question is whether this will be a one-and-done hike followed by another long wait. A meaningful yen recovery would likely require the BOJ to maintain a stronger tightening stance.”

Japanese interest rates

• Sources told Reuters that the Bank of Japan is preparing markets for a possible December rate hike, reinstating its previously hawkish tone as fears over the yen’s sharp depreciation return and political pressure to keep rates low fades.

• Following Ueda’s comments, market pricing for a quarter-point BOJ rate hike in December rose from 40% to 60%.

• To reassess these expectations, investors are awaiting further data on inflation, unemployment, and wage growth in Japan.

US stock indexes rose on Friday after a technical issue affecting futures trading was resolved, allowing bets on a Federal Reserve rate cut to continue and supporting demand for high-risk assets.

Following the Thanksgiving holiday on Thursday, Wall Street is set to close early today, with normal trading hours resuming next week.

US authorities halted stock futures trading for several hours earlier in the day due to a cooling-system malfunction at a CyrusOne data center used by CME Group. The exchange operator confirmed that the issue was fixed and trading had resumed.

Speculation around the Federal Reserve’s policy stance in next month’s meeting continues to build. According to CME FedWatch, the probability of a rate cut in December has risen to 83%, up from 50% a week ago.

Federal Reserve Governor Christopher Waller said this week that a rate cut in December is necessary, though he noted that the January decision may be more challenging due to a backlog of delayed economic data.

At the close of the session, the Dow Jones Industrial Average rose 0.6% (289 points) to 47,716, posting a weekly gain of 3.2% and a monthly gain of 0.3%, with an intraday high of 47,750 and a low of 47,475.

The broader S&P 500 climbed 0.5% (36 points) to 6,849, recording a weekly gain of 3.7% and a monthly gain of 0.1%, reaching a high of 6,850 and a low of 6,819.

The Nasdaq Composite rose 0.6% (151 points) to 23,365, jumping 4.9% for the week but logging a monthly loss of 1.5%, with an intraday high of 23,365 and a low of 23,250.

Most cryptocurrencies rose on Friday as demand returned for high-risk assets, supported by growing bets that the Federal Reserve will cut interest rates.

Speculation around the Fed’s policy stance in next month’s meeting continues to build. According to CME’s FedWatch tool, the probability of a rate cut in December has climbed to 83%, up from 50% a week ago.

Federal Reserve Governor Christopher Waller said this week that a rate cut in December is necessary, though he noted that the January decision could be more complicated due to a backlog of delayed economic data.

Ethereum

In trading, Ethereum rose 0.3% on CoinMarketCap to $3,040.09 as of 19:19 GMT, bringing its weekly gains to 10%.

As the Trump administration pushes to broker a peace agreement between Ukraine and Russia, analysts and traders are trying to assess how any potential deal might reshape Europe’s energy flows.

Reaching such an agreement is far from guaranteed. Major obstacles and disagreements remain, and Russia has yet to signal its stance on the proposal. White House envoy Steve Witkoff is set to visit Moscow next week to discuss the plan with the Kremlin, at a time when Russia appears reluctant to accept any arrangement that does not fully meet its demands.

Even if a deal were reached — which is not the base case for many market participants — it is unlikely to change Europe’s hesitation about returning to Russian energy, an exposure the bloc has spent years working to unwind. Most analysts agree that a “clean” ceasefire would not meaningfully alter Europe’s post-2022 stance.

The decision to abandon Russian pipeline gas has been costly for households and businesses across Europe. Energy bills and industrial expenses surged sharply. And more than three years after the start of the energy crisis that weighed heavily on living standards and competitiveness, the prospect of easier Russian flows is not generating much enthusiasm among EU capitals.

No way back

Russian gas is not banned in the EU — at least not yet. Under current plans, the bloc intends to phase out imports of Russian LNG by 2027.

But a peace deal is unlikely to reverse Europe’s long-term pivot away from Russian energy.

Europe also lacks an easy or quick way to restart Russian pipeline flows, even if peace were declared tomorrow. Nord Stream has been effectively destroyed. The Yamal–Europe pipeline has been idle since Poland terminated its contract. And the Ukraine–Gazprom transit agreement expires next year, with no political will on either side to renew it. Infrastructure, contracts, and politics all point in one direction — no swift return.

As Reuters columnist Ron Bousso wrote this week: “Even if sanctions on Russia’s energy sector were relaxed, European governments would be reluctant to re-embrace Moscow as a major supplier after the 2022 shock.”

In reality, most EU countries have received no Russian gas for nearly three years — and many have no intention of resuming dependence on the Kremlin, even under a fair peace settlement for Ukraine.

Gas prices remained relatively contained this year, staying within a narrow range despite storage sites filling at a slower pace than previous years ahead of winter. EU storage levels are currently roughly ten percentage points below last year’s levels and the five-year average. As of November 25, they stood near 77%, according to Gas Infrastructure Europe.

Despite lower storage, markets appear confident that Europe has enough supply for the winter, thanks to record US LNG exports, most of which are now heading to Europe.

Even if Russian pipeline gas magically returned, Europe has already rebuilt its entire supply system around LNG.

Strong LNG flows ease winter worries

The US exported 10.1 million metric tons of LNG in October, according to LSEG data reported by Reuters, becoming the first country ever to exceed 10 million tons in a single month. Venture Global’s Plaquemines project and higher output from Cheniere’s Corpus Christi Stage 3 helped boost volumes.

About 69% of US LNG exports went to Europe last month.

US LNG is set to grow further. The US Energy Information Administration (EIA) expects LNG exports to reach 14.9 billion cubic feet per day this year — up 25% from 2024 — and to increase another 10% by 2026. Faster-than-expected ramp-ups at Plaquemines have pushed the agency to raise its short-term forecasts.

More supply is coming globally as well. Qatar, the world’s second-largest LNG exporter, is pushing ahead with the largest expansion in its history, planning to boost export capacity by 85% by 2030.

This wave of supply is welcome news for Europe, especially as the EU moves to soften its proposed “Corporate Sustainability Due Diligence Directive” (CSDDD), which could have disrupted LNG flows and even imposed penalties on companies. Fears over security of supply have prompted policymakers to rewrite the proposal.

European gas prices have not experienced the sharp winter surges seen in past years. Instead, TTF benchmark prices in Amsterdam fell below €30 per megawatt-hour this week — the lowest in a year and a half — supported by strong LNG arrivals, mild weather, and talk of a potential Ukraine peace deal.

In another sign of supply comfort, France’s TotalEnergies will remove its Le Havre floating storage and regasification unit (FSRU), installed in 2022 as an “emergency backup.” The company said the facility is no longer needed.

Portfolio managers are also increasingly positioning for lower prices. Speculators have shifted from net-long to net-short on TTF futures for the first time since March 2024, according to ING.

ING analysts Warren Patterson and Ewa Manthey noted Thursday: “Once again, the move was driven by new short positions, pushing total shorts to another record high.”

They warned, however, that such large short positions carry significant risk if supply or demand delivers surprises during the winter.