Market sentiment is uncertain on Tuesday as traders await key data from the UK, Canada, and the US, while tensions rise in China, Canada, and Germany. Liquidity is also low ahead of Wednesday's FOMC meeting and weak PMI from major economies.
China's record $45.7 billion capital outflow in November and escalating US-China tensions are affecting global risk appetite, impacting the Antipodean currencies and commodities.
Amid these plays, the US Dollar and Gold remain lackluster, while EURUSD and GBPUSD retreat. That said, USDJPY paused a six-day uptrend, whereas Antipodeans dropped back toward the multi-year lows. Further, Crude Oil lacks upside momentum, equities trade mixed, and cryptocurrencies edge higher.
EURUSD struggles despite a US dollar pullback. Mixed PMI data and political turmoil in Germany, as Chancellor Scholz loses a no-confidence vote, limit Euro gains. The ECB's dovish signals and weak economic indicators in the Eurozone also limit Euro gains.
USDJPY pauses at a three-week high, with Japan’s economy minister reaffirming the Bank of Japan’s flexible policy stance.
GBPUSD retreats from its largest daily gain in two weeks as the UK's PMI data shows weak growth, while economic concerns and the Bank of England’s cautious stance weigh on the Pound ahead of key reports this week.
In Australia, weekly and yearly consumer confidence gauges fell, adding pressure to AUDUSD, which remains at a yearly low. NZDUSD also struggles, with concerns about New Zealand’s increasing debt issuance in 2025.
Further, USDCAD remains strong, boosted by political turmoil in Canada and concerns over falling oil prices. Canada's widening budget deficit and downbeat comments from the Bank of Canada contribute to the bearish mood.
Gold stays subdued, impacted by China-related worries and a cautious mood ahead of US data. Mixed equities and expectations of slower Fed rate cuts in 2025 also limit Gold's appeal.
US Crude Oil prices are under pressure, with fears of weakened energy demand due to China’s issues and increased OPEC+ output in 2025. Reduced Middle East tensions further challenge oil buyers.
Cryptocurrencies are buoyant, with Bitcoin (BTCUSD) near record highs and Ethereum (ETHUSD) at a three-year peak. Optimism fueled by Trump’s influence and growing institutional interest supports market sentiment.
Looking ahead, UK employment data is a key focus, along with Canadian inflation and US retail sales, which may impact momentum. GBPUSD is unlikely to see a strong rally even if the US data disappoint. The US dollar may remain defensive amid mixed Fed signals, while USDCAD could hold firm due to Canadian political instability and soft oil prices. Gold may ease as traders await the FOMC’s rate decision.
May the trading luck be with you!
