Today is the last normal trading day until January 6, and the policy meeting minutes from the RBA and the BOJ will close the day ahead of the holiday period, so marry Christmas to all.

The year’s final week began with mixed signals across markets. The UK economy showed signs of stagnation, with a downward revision to 0.0% for Q3 GDP, which weighed heavily on the pound throughout most of the day. In contrast, after European markets closed, the Nasdaq rose by 1%, and equities continued to recover from the sharp post-Fed selloff.

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In bond markets, yields on 10-year and 30-year Treasuries climbed across the curve, reaching their highest levels since May. This initially supported demand for the US dollar, although the rally partially faded later in the day as risk sentiment improved. While the economic data released on the day had limited market impact, it followed a packed schedule as statistics agencies hurried to publish figures before the holiday.

The Canadian dollar received some support from better-than-expected October GDP data, but a weak November monthly reading underscored potential risks heading into the new year. Meanwhile, commodity currencies in North America saw strong rebounds late in the session, erasing earlier losses. In terms of US data, durable goods orders and consumer confidence showed sharp declines, but there was a bright spot with positive non-defense capital goods orders. Markets ended the day balancing conflicting signals from these developments.

Today’s Market Expectations

Today is expected to be quiet, with the Richmond Manufacturing Index to close the day, which is expected to fall further in contraction, as manufacturing keeps suffering in Western countries. However, we also have the Monetary Policy Meeting Minutes from the Bank of Japan and the reserve bank of Australia.

The Reserve Bank has a longstanding responsibility to ensure the stability of the financial system. A stable financial environment allows financial institutions, markets, and infrastructure to effectively channel funds between savers and investors, supporting overall economic growth. The Bank plays a dual role in this regard: reducing the risk of systemic financial disruptions and responding to disturbances when they arise. To address these challenges, the Reserve Bank collaborates with other key agencies through the Council of Financial Regulators (CFR). Chaired by the Reserve Bank Governor, the CFR includes the Bank, APRA, the Treasury, and ASIC. Its mission is to enhance regulatory efficiency and effectiveness while safeguarding the stability of the financial system.

According to the BOJ minutes, globally, the U.S. economy grew moderately, Europe stabilized but showed weak spots, and China’s recovery slowed, while Japan’s economy maintained a moderate recovery, with resilient consumption supported by wage growth despite inflation at 2.5%. The BOJ emphasized caution in monetary policy amid uncertainties. Gradual rate hikes, potentially reaching 1.0% by late 2025, depend on inflation trends. The government called for continued monetary support and fiscal measures to sustain wage-driven growth and stabilize inflation at 2%.

Yesterday there was some volatility in the markets during the European session, with the USD making a bullish move, while risk assets retreated before rebounding again. As a result, we got caught on the wrong side and had two losing trades early in the day, but made up for it with three winning forex signals in the US session.

Gold Testing the 100 Daily SMA From Below This Time

Gold and cryptocurrency markets remain highly volatile, driven by shifting expectations for monetary policy. Last week, gold prices dropped $100 after failing to breach the $2,725 resistance level, with strong U.S. services PMI data and anticipated Federal Reserve rate cuts adding to the bearish momentum. The decline was further confirmed as gold prices fell below the 100 SMA, which has since acted as resistance, rejecting the price during yesterday’s trading session.

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XAU/USD – Daily Chart

GBP/USD Rejected by the 20 Daily SMA

In the forex market, GBP/USD faced significant pressure, falling below 1.25 after both the Federal Reserve and Bank of England meetings. Although the pair recovered from November lows to rise above 1.26, the UK economy’s weakness, highlighted by today’s final Q3 GDP data, continues to weigh heavily. Earlier in the week, the GBP showed strength, buoyed by positive UK data, but lost around 2 cents following the Fed’s aggressive rate cut and slipped further below 1.25 after the BOE’s dovish stance. A brief recovery was halted as the 20 SMA provided resistance, rejecting further upward movement.

GBP/USD – H4 Chart

Cryptocurrency Update

Bitcoin Bounces Off $92,700K

BTC/USD – Daily chart

Ethereum Heads Toward $3,500 Again

Ethereum also saw volatility, recovering from an early-week dip below $3,000 to trade near $4,000. However, after a Monday rally, Ethereum failed to sustain gains above the $4,000 level, with the decline accelerating yesterday as prices fell below $3,500. Both the gold and cryptocurrency markets highlight ongoing uncertainty, with market participants reacting to evolving monetary policies and economic conditions.

ETH/USD – Daily chart

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.