2025-12-03 Market Analysis: Risk Assets Recover, Dollar Weakens Amid Fed Speculation

This report synthesizes insights from the December 3, 2025 Reuters article [1] and market data [0]. Risk assets showed resilience, with the S&P 500 rising 0.25% on December 2, 2025, and futures trading higher during early London hours, suggesting the recent selloff was a short-term blip [1]. The U.S. Dollar Index (DXY) hovered around 99.3-99.4 due to dual factors: market expectations of Federal Reserve (Fed) rate cuts and former President Trump delaying the Fed chair appointment to 2026—with Kevin Hassett (viewed as pro-lower rates) a leading candidate, amplifying rate cut bets [1]. Two high-impact economic reports are scheduled for December 3: the ADP November jobs report (consensus: 5-20k jobs added) and the ISM November Services PMI (consensus: 52.0-52.1), which will shape policy expectations [0]. Geopolitical developments include the absence of a Ukraine peace deal and the EU’s plan to phase out Russian gas by 2027 [1].

1. Risk assets demonstrated resilience, indicating the recent downturn was likely transient rather than a sustained trend [1].
2. Dollar weakness is tightly linked to policy expectations; the potential Fed chair pick’s pro-lower-rate stance is magnifying market bets on rate cuts [1].
3. The upcoming ADP and ISM services reports are critical, as they could either validate current policy expectations or trigger market shifts [0].

• Risks
  : Disappointing ADP/ISM data could reverse risk asset gains and strengthen the dollar [0]. Geopolitical uncertainties (Ukraine conflict) and EU energy transition challenges (gas phase-out) may introduce market volatility [1].
• Opportunities
  : Persistent dollar weakness could benefit export-reliant U.S. firms and emerging market assets [0]. A positive economic data surprise (stronger ADP/ISM numbers within or above consensus) could further boost risk assets [0].

• S&P 500 recovered 0.25% on December 2, 2025; futures were up in early London trading [1].
• U.S. Dollar Index (DXY) traded around 99.3-99.4 [0] due to Fed rate cut bets and a delayed Fed chair appointment (Kevin Hassett, pro-lower rates) [1].
• December 3, 2025, economic releases: ADP November jobs report (consensus: 5-20k jobs added) and ISM November Services PMI (consensus: 52.0-52.1) [0].
• Geopolitical updates: No Ukraine peace deal; EU to phase out Russian gas by 2027 [1].