Even as US traders return from Christmas, markets remain uncertain. Boxing Day holidays in Europe, the UK, and Canada limit activity, and a sparse calendar in Japan and China further dampens momentum.
The US Dollar and Gold edge higher, while major currencies and Antipodeans stay muted. Crude Oil and cryptocurrencies retreat, and Asia-Pacific equities drift lower. Further, fresh geopolitical tensions from China, Russia, and the Middle East add to the unease, but year-end holiday sentiment keeps market reactions subdued.
Despite muted market activity, EURUSD remains under pressure as the European Central Bank’s (ECB) dovish stance combines with political unrest in France and Germany. Adding to the downside are a hawkish Fed outlook and rising trade tensions between China and Europe. With weak economic data from the Eurozone, the bloc’s currency finds little support for recovery.
GBPUSD posts its first daily gain of the week as markets consolidate amid holidays and ahead of mid-tier US data. However, concerns over the UK economy and expectations of further rate cuts from the Bank of England (BoE) cap the pair's upside potential.
USDJPY continues its three-day uptrend as comments from Bank of Japan (BoJ) Governor Kazuo Ueda disappoint policy hawks. However, Japan’s likely first positive output gap in seven years challenges the pair's buyers, keeping the trading session uncertain.
The Australian, New Zealand, and Canadian Dollars stay under pressure despite the US Dollar's struggles. The Antipodeans are weighed down by China’s economic concerns and dovish signals from their central banks. Notably, AUDUSD and NZDUSD hover near yearly lows, while USDCAD rebounds from a four-day slide, supported by crude oil’s stalled recovery.
Gold benefits from market uncertainty, leveraging its traditional haven appeal. Rising annual demand for the metal and skepticism over the US Dollar's further strength add to its bullish momentum.
Crude oil struggles to capitalize on geopolitical supply fears as concerns over China’s demand outlook and a stronger US Dollar weigh on sentiment. Additionally, buyers also remain cautious after a three-day rally, awaiting the US weekly inventory data for further direction.
Bitcoin (BTCUSD) posts its first loss in three days, while Ethereum (ETHUSD) ends a three-day winning streak as traders trim yearly gains amid light trading and the holiday mood. Fears of taxes on crypto staking and whale liquidations add to selling pressure. However, optimism driven by Trump-led industry support and strong crypto demand from Russia and MicroStrategy helps keep buyers hopeful.
Although year-end trading is likely to limit market momentum, a series of mid-tier data from Switzerland and the US could provide some action for momentum traders, especially with US participants returning from the Christmas holiday. Key releases include the Swiss ZEW Survey for December, US Weekly Jobless Claims, and EIA Crude Oil Inventories.
The US Dollar is expected to hold onto gains amid a hawkish Fed bias, unless the data disappoints. USDCHF may face downside pressure, while EURUSD is unlikely to recover, weighed down by domestic concerns and the ECB's dovish stance. GBPUSD could defend recent gains due to holiday consolidation, while USDJPY is expected to remain firm.
Antipodean currencies (AUDUSD, NZDUSD and USDCAD) are likely to maintain their bearish trend, while Gold and crypto buyers should stay optimistic. Crude oil, however, may continue to retreat further.
May the trading luck be with you!
