Market sentiment is mixed but slightly positive as traders focus on the end of a volatile 2024, with attention on Gold's rise and US Dollar strength. Positive news from China boosted sentiment in Asia, while Japan's data dragged USDJPY from a multi-week high.
The US Dollar remains defensive, with EURUSD and GBPUSD staying low. AUDUSD and NZDUSD drop toward the yearly lows, while USDCAD edges higher after snapping a four-day losing streak. Moving on, Crude Oil struggles for direction after its first loss in four days, Wall Street closed mixed, and Cryptos recover Thursday’s losses.
Despite mixed US jobless claims and a weak Wall Street close on Thursday, the US Dollar is set to post weekly gains, fueled by a hawkish Fed and year-end consolidation. The Greenback's strength is putting pressure on EURUSD and GBPUSD, driven by negative factors in Europe and the UK, along with dovish stances from the European Central Bank (ECB) and Bank of England (BoE).
USDJPY pulls back from a five-month high as Tokyo inflation data and the Bank of Japan's (BoJ) Summary of Opinions suggest potential rate hikes in 2025. The mixed market sentiment also adds pressure on Yen pair buyers.
AUDUSD and NZDUSD print a four-day losing streak while approaching the yearly low marked the last week amid dovish bias about the Reserve Bank of Australia (RBA) and the Reserve Bank of New Zealand (RBNZ). In doing so, the Aussie and the Kiwi pair fail to cheer hopes of witnessing upbeat China growth, backed by the forecasts of the World Bank and China’s National Bureau of Statistics (NBS). The pairs’ declines could also be linked to the lack of conviction about the dragon nation’s ability to defend its economic growth despite multiple measures and assurances from major institutions.
Similarly, USDCAD reflects weakness in commodity-linked currencies, driven by expectations of rate cuts from the Bank of Canada (BoC), political uncertainty, and recent declines in Crude Oil prices.
Gold is on track for its biggest yearly gain since 2010, despite losing momentum early Friday. The precious metal reflects strong market confidence in traditional safe havens, fueled by increased buying from central banks and key buyers like India and China. Additionally, uncertainty around monetary policies and concerns over rising geopolitical and trade tensions, especially with Donald Trump’s re-election, are driving demand for gold.
Crude Oil faces challenges after ending a three-day winning streak, weighed down by a stronger US Dollar and concerns that OPEC+ has limited ability to boost prices, despite delaying supply increases. Meanwhile, Bitcoin (BTCUSD) and Ethereum (ETHUSD) saw their biggest daily loss in over a week before posting modest gains early Friday. The leading cryptocurrencies struggle to capitalize on industry-positive news and higher ETF inflows amid year-end consolidation.
Looking ahead, the US Goods Trade Balance, Wholesale Inventories for November, and weekly Crude Oil and Natural Gas inventory data will keep intraday traders busy. However, major movements are unlikely due to the year-end trading lull and a lack of key economic catalysts. Despite this, the US Dollar and Gold are expected to remain strong and could end 2024 on a positive note.
May the trading luck be with you!
