Market sentiment stayed on the sidelines after a slightly negative day, despite some positive data from China. This might be due to traders still in a holiday mood and a quiet calendar outside of China. The absence of major negative news helped keep sentiment neutral, but it wasn’t strong enough to give momentum to the markets. As a result, the U.S. Dollar edged higher, pushing back against previous trends.
Late Tuesday, the Federal Open Market Committee (FOMC) minutes showed that policymakers were cautious and divided over the next rate cut. They also discussed the Fed’s balance-sheet policies, noting that reserve levels are low and purchases may soon be needed to keep money markets stable. This added pressure to the dovish Fed outlook and helped boost the U.S. Dollar.
On Wednesday, China’s PMIs for December provided some support for risk appetite, even though momentum was still lacking. China’s official manufacturing PMI unexpectedly rose to 50.1, ending an eight-month contraction. The non-manufacturing PMI also improved to 50.2 from 49.5. The combined composite PMI rose to 50.7 from 49.7, suggesting a broader economic recovery.
The private-sector survey from S&P Global/RatingDog also showed a small rebound, with the PMI rising to 50.1 from 49.9. Although there was some optimism heading into 2026, the recovery still seems fragile, relying heavily on domestic demand and government support.
In the housing market, China made a move to ease property taxes, aiming to provide a slight boost, but the policy is seen as a short-term fix and not likely to bring immediate relief for developers or the economy at large.
As for oil, OPEC+ is expected to maintain its decision to pause any further production hikes during its meeting on January 4, due to concerns about a global oil oversupply. This decision is unlikely to provide much support for oil prices in the short term.
A private survey from the American Petroleum Institute (API) showed a smaller-than-expected rise in crude oil inventories, which could add some pressure to oil prices.
The U.S. Dollar Index (DXY) rose to its highest point in a week, pushing EURUSD down to a one-week low for the second day in a row. GBPUSD also weakened, while USDJPY bounced off its low. AUDUSD continues to face pressure, and NZDUSD dropped for the fifth consecutive day. USDCAD edged up. On the commodities side, U.S. oil stalls two-day recovery, but gold remained flat and under pressure. Bitcoin (BTCUSD) and Ethereum (ETHUSD) remained mostly quiet after a positive day, while Asia-Pacific equities moved in both directions, reflecting a soft performance in U.S. stock markets.
The U.S. Dollar’s recovery, combined with slightly negative sentiment, pushed EURUSD and GBPUSD to their lowest levels in a week while boosting USDJPY for the second day in a row. However, the lack of major data or events limited momentum, with traders mostly waiting for the upcoming U.S. weekly initial jobless claims report to provide direction.
AUDUSD couldn’t benefit from China’s positive PMIs, as a cautious mood and a stronger U.S. Dollar kept pressure on it. The same factors also dragged NZDUSD down for the fifth day in a row. Meanwhile, USDCAD rose for the third straight day after hitting its lowest point since late July. Despite a rebound in crude oil, Canada’s key export, it wasn’t enough to spark significant buying interest in the Canadian Dollar.
Gold prices struggled to find direction after failing to recover from their biggest daily drop in two months. The firmer U.S. Dollar, mixed market sentiment, and year-end positioning all weighed on the precious metal. On the other hand, crude oil stops its two-day winning streak, despite expectations that OPEC+ will maintain its current output cut policy at its January 4 meeting.
Cryptocurrencies fail to extend Tuesday’s recovery amid lackluster trading and the U.S. Dollar’s recovery. Notably, the Asia-Pacific shares edged lower despite China PMIs, tracing modestly downbeat Wall Street performance.
Notably, China’s ByteDance (the parent company of TikTok) is planning to invest a huge US$14 billion in Nvidia chips in 2026, driven by surging demand for computing power.
As we approach the final trading day of 2025, U.S. jobless claims and risk-related news will likely shape market momentum. The U.S. Dollar remains strong, boosted by the Fed’s cautious stance, which continues to weigh on risk assets like cryptocurrencies and equities. This could push the Greenback higher, keeping pressure on pairs like EURUSD and GBPUSD, while commodity currencies like AUDUSD and NZDUSD remain under pressure despite China’s positive data.
Gold, still struggling after its biggest drop in three months, faces a tough time finding direction due to the firmer Dollar and mixed sentiment. Meanwhile, crude oil posts a three-day winning streak, as expectations grow that OPEC+ will stick to its output cut policy at the January 4 meeting, though this hasn’t significantly boosted the Canadian Dollar.
May the trading luck be with you!
