Market momentum slows as Japan kicks off its four-day New Year holiday and Western traders embrace the festive mood. However, China’s official PMIs for December sparked early moves in commodities and Antipodean currencies. USDJPY saw the biggest moves despite no major catalysts. AUDUSD pulled back toward yearly lows, while the US Dollar and Gold faced struggles. Crude Oil remained strong, supported by geopolitical tensions and expectations of higher energy demand from China due to stimulus. Meanwhile, equities drifted lower, and cryptocurrencies lost some yearly gains. The US Dollar broke its two-day losing streak, helped by mixed regional Fed data and strong US Pending Home Sales.
The US Dollar's slight gains, along with a dovish outlook from the ECB and BoE, put downward pressure on EURUSD and GBPUSD. ECB's Klaas Knot mentioned trade war fears while justifying the move away from tighter policies. Meanwhile, concerns over the UK’s slow growth and political issues kept GBPUSD weak.
USDJPY saw a three-day losing streak despite Japan's holidays. While there were no major catalysts, speculation about potential Bank of Japan (BoJ) rate hikes and government intervention to support the Yen exerted downside pressure on the pair.
China’s December PMIs, released by the National Bureau of Statistics (NBS), sparked some movement in the AUDUSD during the slow trading period. The Manufacturing PMI eased from November but still showed a three-month expansion. Meanwhile, the Non-manufacturing PMI rose to 52.2, surpassing expectations. However, growing trade war fears and geopolitical tensions weighed on optimism about China, keeping AUDUSD under pressure, especially with a dovish stance from the Reserve Bank of Australia (RBA).
NZDUSD follows its Australian counterpart, marking its first daily loss in three days and nearing its yearly low from mid-December. The Kiwi's decline reflects concerns over New Zealand’s economy and expectations of further rate cuts from the Reserve Bank of New Zealand (RBNZ), despite no specific intraday catalyst.
Meanwhile, USDCAD remains under pressure after its biggest drop in six weeks. The Loonie pair’s weakness is fueled by higher Crude Oil prices, Canada’s main export, and the US Dollar's consolidation.
Gold prices hover around a four-month support line, with sellers struggling to extend the previous two-day losing streak in a sluggish market. Mixed signals from China, central bank buying, and yearly gains keep XAU/USD traders on edge, despite celebrating the best year since 2010.
Crude Oil rises to its highest level since early November, marking a three-day winning streak. Geopolitical tensions in the Middle East and inventory cuts help support prices while reducing yearly losses. However, concerns over an OPEC+ output increase, weaker demand from China, and a stronger US Dollar are testing energy buyers.
Doubts about US Bitcoin (BTCUSD) reserve adoption, mixed with strong on-chain data, limited BTCUSD movement. Similarly, Ethereum (ETHUSD) lacked momentum, although ETH buyers are more optimistic than BTC buyers, driven by whale transactions, chain data, and price levels.
Looking ahead, a light calendar and New Year celebrations will slow market momentum for the rest of Tuesday. With most international markets closed on Wednesday, it will be another quiet day for traders. However, the US Dollar, Gold, and cryptocurrencies are expected to start 2025 strong, supported by positive catalysts from the previous year.
May the trading luck be with you!
