Market momentum slows on Monday as traders focus on year-end festivities, overlooking the week's only active trading day with a light calendar. US Dollar bulls face pressure from debt ceiling concerns, while EURUSD struggles amid fears of slower European Central Bank (ECB) rate cuts in 2025. USDJPY edges higher despite strong Japan PMI ahead of a long holiday, and Gold rises on a softer US Dollar and market uncertainty. The Australian, New Zealand, and Canadian Dollars gain, fueled by rising oil prices and hopes for more Chinese stimulus. Equities rise slightly, while cryptocurrencies trade mixed amid low activity and lackluster news.
Amid challenges for the Federal Reserve (Fed) hawks and comments from European and UK policymakers hinting at fewer rate cuts in 2025, EURUSD and GBPUSD consolidate yearly losses. ECB Governing Council member Robert Holzmann recently suggested the bank might wait longer before its next rate cut. Similarly, Bank of England policymakers have emphasized that there’s no predetermined path for lower rates, despite ongoing UK data and political uncertainties.
USDJPY lacks clear direction, pausing after Friday’s retreat from its highest level since July. Despite Japan’s strong December Manufacturing PMI, the pair struggles amid rising concerns over the Bank of Japan’s potential rate hikes and market intervention to defend the Yen following last week’s inflation data. With a four-day holiday in Japan starting Tuesday, market activity is expected to slow further.
AUDUSD and NZDUSD rebound from yearly lows, rising nearly half a percent intraday, driven by expectations of further stimulus from China. Similarly, USDCAD breaks a two-day winning streak as rising crude oil prices, Canada’s key export, contribute to year-end consolidation.
Gold price remains lackluster while tracking inactive markets, edging higher of late amid softer US Dollar. In doing so, the Gold buyers take a breather while bracing for the biggest yearly gain since 2010. On the other hand, Crude Oil extends Friday’s gains backed by an unexpected draw in the weekly US inventories but stays on the way to posting a two-year losing trend.
Bitcoin (BTCUSD) faces pressure as large whale transactions and cautious sentiment build ahead of a major options expiry. Meanwhile, Ethereum (ETHUSD) rises over 2%, shrugging off profit-taking in cryptos, with hopes that Bitcoin’s pullback will boost demand for Ethereum.
Looking ahead, December PMIs from Chicago and Dallas Fed, along with US Pending Home Sales for November, will fill the economic calendar. However, year-end inaction may keep trading momentum slow, likely leading to consolidation in yearly gains and losses. Still, the US Dollar, Gold, and cryptocurrencies are expected to remain in focus for bulls during the final days of a strong year.
May the trading luck be with you!
