HFMarkets (hfm.com): New market analysis services.

[HFM]

Date: 12th December 2025.

Why Is the USD Declining?

The US Dollar Index is moving upwards but only after a bearish price gap. The bearish price gap saw the US Dollar Index instantly fall close to a two-month low. As a result, the price of Gold is trading significantly higher than the past few days. However, why is the US Dollar taking a hit when the Fed is indicating a pause?

What the Fed says and What Markets Believe Can Be Different​

Investors continue to digest the outcome of yesterday’s Federal Reserve meeting, where policymakers lowered interest rates by 25 basis points to a range of 3.75-3.50% and announced the reinstatement of Treasury bond purchases totalling $40 billion. The QE programme being reinstated is a key reason why the US Dollar is weakening, as it is deemed to be a dovish move. This also indicates that the FOMC can see risks to the economy, government debt and employment.

At the same time, officials signalled the possibility of pausing the easing cycle, emphasising the need for clearer labour-market and inflation data, both of which remain key concerns, before taking further action.

The decision reflected a divided committee, passing by a vote of nine to three. Chicago Fed President Austan Goolsbee and Kansas City Fed President Jeffrey Schmid opposed the rate cut, while Board member Stephen Miran argued for a larger 50-point reduction.

Comments from Fed Chair Jerome Powell struck a balanced tone. He noted that an additional rate hike is not the baseline scenario, yet indicated that rates are now within a ‘neutral’ zone, giving the Fed room to adopt a wait-and-see stance to assess the impact of recent moves on the economy.

FOMC projections currently indicate only one rate cut next year. Market participants, however, still expect two or more. This mismatch is a major reason the Dollar is declining. Institutions and investors are not aligned with the Fed’s outlook for the next 12 months. Economists also highlight very low oil prices. These prices are likely to help keep inflation contained over the coming months.

US Dollar Index - Future Pricing​

If the NFP Change and Unemployment Rate indicate a weaker employment sector, the pricing for the upcoming months is likely to change quickly. Particularly if the inflation rate also remains at the same level or lower. Under these conditions, the US Dollar may continue to fall and Gold to rise.

HFM - USDX 15-Minute Chart


A key support level for the US Dollar Index in the medium term is 97.40. Currently, the Dollar is retracing upwards but technical indicators continue to maintain a bearish bias.

Key Takeaways:​

• The Dollar is weakening because markets view the Fed’s renewed $40B QE programme as a dovish signal.
• A major driver of Dollar pressure is the clear mismatch between the Fed’s forecast of one rate cut and markets expecting two or more.
• Rising risks in growth, inflation, and employment are highlighted by a divided FOMC vote and persistently low oil prices.
• If upcoming NFP and inflation data soften, the Dollar may continue to fall while Gold gains further momentum.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 15th December 2025.

Asian Markets Slip as BOJ Rate Hike Looms; Bitcoin Under Pressure.

Asian equity markets opened the week lower, while bitcoin prices retreated as investors positioned ahead of a widely expected interest-rate hike by the Bank of Japan (BOJ) later this week. Broader risk sentiment remained fragile, with traders balancing central bank policy expectations, slowing Chinese growth signals, and renewed volatility in global technology stocks.

Japan Stocks Fall Despite Improving Business Sentiment​

Japan’s Nikkei 225 index declined 1.3% to 50,168.11, even as the BOJ’s quarterly Tankan survey pointed to improving sentiment among large manufacturers. The diffusion index measuring optimism rose to 15 from 14 in the previous quarter, marking its highest level in four years.

The Tankan index reflects the percentage of firms reporting favourable business conditions minus those reporting unfavourable ones. While current conditions improved, expectations for the coming quarter were less optimistic, highlighting ongoing uncertainty in Japan’s economic outlook.

Japan’s economy contracted at an annualised pace of 2.3% in the July-September quarter, its first contraction in six quarters. However, uncertainty for export-heavy sectors eased following an agreement between Japan and the United States that limits baseline import tariffs to 15%, providing relief to major automakers and electronics manufacturers.

BOJ Rate Hike Expectations Pressure Bitcoin and Risk Assets​

The stronger Tankan results reinforced market expectations that the BOJ will proceed with a 25-basis-point interest rate hike, lifting the benchmark rate to 0.75%. Higher domestic yields are expected to attract capital back into Japan, reducing demand for alternative assets such as cryptocurrencies.

Bitcoin prices dropped below $88,000 early on Monday from around $92,000 before recovering to just above $90,000 later in the session, according to CoinDesk data.

Chinese Markets Decline on Weak Investment Data​

Elsewhere in Asia, Chinese equities moved lower after fresh data underscored persistent weakness in domestic demand. Government figures showed fixed-asset investment, including spending on infrastructure and factory equipment, fell 2.6% year-on-year in November. This implied an 11.1% decline over the first eleven months of the year.

Retail sales increased 4% over the January-November period, while industrial output rose 4.8%, offering limited reassurance amid broader concerns over economic momentum.

The data followed a high-level meeting of China’s Communist Party leadership last week, which delivered no major policy changes. Officials reiterated commitments to boosting consumer spending and investment to support domestic demand.

While policy support could drive a partial recovery in the coming months, it is unlikely to prevent China’s growth from remaining weak throughout 2026.

Asia-Pacific Market Performance Overview​

• Hang Seng (Hong Kong): Fell 1.4% to 25,625.60
• Shanghai Composite: Declined 0.6% to 3,867.92
• Kospi (South Korea): Dropped 1.8% to 4,090.59
• ASX 200 (Australia): Slipped 0.7% to 8,640.60
• Taiwan Benchmark Index: Lost 1.2%
• India Sensex: Little changed
  

Wall Street Futures Stabilise After Tech-Led Sell-off​

US equity futures pointed modestly higher, with S&P 500 futures rising 0.2% and Dow Jones futures up 0.3%. On Friday, Wall Street retreated from record highs, with the S&P 500 falling 1.1% for its worst session in three weeks. Technology stocks led the decline, dragging the Nasdaq Composite down 1.7%, while the Dow Jones Industrial Average shed 0.5%.

Broadcom weighed heavily on market sentiment, plunging 11.4% despite reporting quarterly profits that exceeded analyst expectations. While analysts described the results as solid, investor concerns surrounding the sustainability of the artificial-intelligence rally intensified. Oracle fell nearly 11% despite delivering a profit beat, fuelling broader worries about AI-related valuations. Nvidia shares declined 3.3%, while Oracle extended losses with an additional 4.5% drop.

Markets Update​

In early Monday trading, US crude oil rose 26 cents to $57.70 per barrel, while Brent crude added 29 cents to $61.41 per barrel.

The US dollar weakened against the Japanese yen, slipping to 155.16 from 155.92 late Friday. The euro edged lower to $1.1733 from $1.1739.

Bitcoin and Crypto Markets Remain Range-Bound​

Bitcoin traded near $89,000 as Hong Kong markets reopened after the weekend, surrendering last week’s post-Federal Reserve rally. FlowDesk noted that demand faded quickly once the 25-basis-point Fed rate cut was delivered, with liquidity thinning into year-end.

Bitcoin and Ether retraced midweek highs, while altcoins remained under pressure. The broader crypto market continues to reflect macro-driven caution rather than outright risk aversion.

Despite surface-level hesitation, positioning beneath the market remains relatively stable. In a Telegram note, FlowDesk highlighted that leverage remains low, volatility is muted, and capital is rotating towards short-dated yield. Market participants are locking in longer-term funding at compressed rates, signalling a focus on balance-sheet optimisation rather than directional trades.

Glassnode observed that bitcoin’s range-bound price action has prompted renewed buying from digital-asset treasury companies. Periods of reduced accumulation by such buyers have previously been cited as a factor behind bitcoin’s stagnation earlier in the year.

This combination of cautious trading and quiet accumulation has left bitcoin confined to a broad trading range, with upside momentum fading but downside pressure remaining limited. Until leverage returns or macro conditions prompt accelerated treasury buying, price action is likely to stay subdued, even as ownership shifts toward longer-term holders.

Market Movement Snapshot​

• Bitcoin (BTC): Trading near $89,000, constrained by low liquidity and weak follow-through after giving back post-Fed gains.
• Ethereum (ETH): Showing relative resilience, holding gains better than Bitcoin amid selective demand and lower selling pressure.
• Gold: Consolidating near record highs around $4,300 per ounce, supported by global rate cuts, elevated debt levels, and sustained central bank demand.
• Nikkei 225: Asian markets opened lower as investors assessed Wall Street’s pullback, China’s November activity data, and Japan’s improving business sentiment.

Oil Prices Edge Higher Amid Glut Concerns and Geopolitical Risks​

Oil prices rose modestly from the lowest levels in nearly two months, supported by signs of stronger Chinese demand even as oversupply concerns continue to weigh on the market. Brent crude hovered near $62 a barrel, while West Texas Intermediate traded close to $58 in thin holiday trading ahead of Christmas and New Year.

China’s apparent oil demand and refining activity were higher year-on-year in November, though other economic indicators pointed to broader weakness. Oil prices are on track for an annual decline amid expectations of a growing surplus as OPEC+ and other producers increase output despite soft demand growth.

Oversupply concerns are increasingly evident in Middle Eastern crude markets, although geopolitical risks continue to provide a floor under prices.

Ukraine intensified attacks on Russian energy infrastructure over the weekend, striking a major refinery and an oil depot in an effort to disrupt revenue streams funding Moscow’s war effort. Meanwhile, US President Donald Trump dispatched envoys to Berlin for another round of talks aimed at ending the conflict.

In parallel, Iran reported seizing a foreign tanker in the Gulf of Oman suspected of carrying smuggled fuel, while the United States intercepted a vessel off Venezuela as pressure mounts on President Nicolás Maduro’s regime. Trump has also reiterated threats of US strikes against drug cartels.

With Brent crude trading volumes below daily averages, price movements are likely to be amplified, increasing the risk of choppy and volatile market conditions.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 16th December 2025.

US Stock Futures Down as Markets Brace for Delayed Jobs Report and Inflation Data.

It’s finally here.
US stock futures moved lower on Tuesday, extending recent losses as global markets prepared for a crucial wave of delayed US economic data that could shape interest rate expectations well into next year.

Futures linked to the Dow Jones Industrial Average declined 0.3%, while S&P 500 futures fell 0.6%. Contracts tied to the Nasdaq 100 slid 0.9%, deepening losses from the start of the week. Technology stocks led Monday’s pullback, as lingering concerns around artificial intelligence investments continued to weigh on sentiment.

While AI-related volatility has dominated recent sessions, market attention has firmly shifted towards macroeconomic developments, with investors closely watching the release of the November US nonfarm payrolls report, which arrives later than usual due to the recent government shutdown.

Today’s employment figures will set the tone for another critical release later this week, as November US consumer inflation data is scheduled for publication on Thursday. Together, the jobs and CPI reports represent a substantial portion of the ‘great deal of data’ that Fed Chair Jerome Powell has emphasised policymakers will assess ahead of their next interest rate decision in January.

The long-awaited November NFP report is expected to fill a data gap left by the shutdown and reignite debate over the future path of Federal Reserve interest rate policy in 2026. The figures are scheduled for release at 13:30 GMT alongside a partial update to October payrolls data.

Economists forecast a modest increase of around 50,000 jobs for November, while the unemployment rate is expected to tick up to 4.4%, keeping it near its highest level since 2021. The softer outlook has reinforced expectations that the Fed may shift its focus more decisively toward supporting labour market conditions rather than battling persistent inflation. Currently, market pricing reflects two Federal Reserve rate cuts next year, assuming employment data continues to cool without triggering a sharp economic downturn.

Regarding inflation, economists expect Thursday’s report to show that US consumer prices rose 3.1% year-on-year in November, reinforcing the view that inflation remains elevated but is no longer accelerating.

Market participants are hoping for a scenario in which labour market conditions weaken just enough to justify further rate cuts, without tipping the economy into recession. Lower interest rates tend to support economic growth and asset prices but also carry the risk of reigniting inflation pressures.

Analysts at Morgan Stanley described the current environment as a ‘bad is good’ regime, where weaker jobs data could actually be bullish for equities by increasing expectations for additional monetary easing.

‘This week’s jobs data could prove more important for equity market perceptions of interest rate policy than last week’s FOMC meeting,’ the bank noted, adding that moderate labour market weakness may be interpreted positively by stock investors.

Overnight, Asian equity markets also declined sharply. Japan’s Nikkei 225 fell 1.6% to 49,383.29 after preliminary factory data indicated a slight slowdown in manufacturing activity. The S&P Global Flash PMI edged higher to 49.7 in November from 48.7 previously, remaining just below the 50 threshold that separates expansion from contraction.

Investors are closely monitoring Japanese economic indicators ahead of the Bank of Japan’s policy meeting on Friday, where a widely anticipated interest rate hike could trigger volatility across global bond markets, currencies, and cryptocurrencies.

Chinese markets also moved lower after weaker-than-expected November data. Retail sales rose just 1.3% year-on-year, marking the slowest pace of growth since the pandemic in 2022. Lending activity and fixed investment figures also came in softer, reinforcing concerns about slowing economic momentum into year-end.

‘Overall, the data confirms a loss of momentum heading into year-end and aligns with our growth forecasts moderating to around 4% in the final quarter,’ said Tan Boon Heng of Mizuho Bank.

Hong Kong’s Hang Seng Index dropped 1.6% to 25,211.24, while mainland China’s Shanghai Composite fell 1.1% to 3,825.71.

In early trading on Tuesday, US benchmark crude oil (WTI) slipped 37 cents to $56.45 per barrel, while Brent crude fell 35 cents to $60.21 per barrel, as investors awaited fresh signals on economic growth and energy demand.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 17th December 2025.

Mixed US Jobs Data, Cooling UK Inflation Keep Rate-Cut Expectations Alive.

Markets struggled to find direction after a mixed US jobs report failed to provide a clear signal for policymakers or investors. While job creation slightly exceeded expectations, rising unemployment and downward revisions to previous data reinforced the view that the US labour market is cooling.

US Jobs Report Keeps Rate-Cut Expectations Alive​

November nonfarm payrolls rose by 64,000, slightly above forecasts. However, this was offset by a sharp downward revision to October’s data and a rise in the unemployment rate to 4.6%, the highest level since 2021.

The data was seen as too inconsistent to materially change the Federal Reserve’s outlook. Markets continue to expect interest rate cuts in 2026, though pricing suggests a pause in January. Fed funds futures imply just 6 basis points of easing in January, but around 58 basis points of cuts over the full year.

US Treasury yields moved both higher and lower during the session before ending slightly lower, reflecting the lack of conviction in the data.

Wall Street Mixed as Tech Offsets Broader Weakness​

US equity futures slipped early Wednesday as investors digested the report. The S&P 500 fell 0.24% to 6,800.26, while the Dow Jones dropped 0.62% to 48,114.26. The Nasdaq gained 0.23% to 23,111.46, supported by strong gains in technology stocks.

Tesla surged 3.1% to a record high, driven by optimism around AI and electric vehicles. Nvidia rose 0.8%, while Meta gained 1.5%, helping stabilise the tech sector.

Energy stocks underperformed, with Exxon Mobil and Chevron falling more than 2%, as oil prices briefly dipped below $55 per barrel before rebounding.

European Markets Drift Lower on Growth Concerns​

European equities opened weaker amid global risk aversion and expectations that central banks may keep rates steady for longer. The Euro Stoxx 50 fell 0.58% to 5,718.95, pressured by signs of slowing US demand and rising unemployment.

France’s CAC 40 closed at 8,106.16, while Germany’s DAX hovered around 24,076.87. The broader STOXX 600 remained flat at 579.80, supported by gains in defensive sectors. Switzerland’s SMI edged up 0.10% to 13,049.75, while Spain’s IBEX 35 dropped 0.70% to 16,921.90.

Energy shares initially fell after Brent crude slumped nearly 3% to its lowest level since February 2021, though prices later recovered on supply concerns.

Asia Mixed as Investors Await Fresh Signals​

Asia-Pacific markets delivered mixed performance. Japan’s Nikkei rose 0.43% to 49,597, supported by a weaker yen and encouraging domestic data. Hong Kong’s Hang Seng gained 0.77% to 25,429.50.

In contrast, Singapore’s Straits Times Index slipped 0.19% to 4,570.82, while Indian markets were set for a cautious open as foreign investor flows remained sensitive to global data and trade uncertainty.

Commodities and FX: Oil Rebounds, Dollar Recovers​

Oil prices rebounded sharply after comments from former US President Donald Trump regarding a possible blockade of Venezuelan oil tankers, reversing earlier losses.

The US dollar initially weakened, with the DXY index falling to 97.87, but later rebounded to 98.16, gaining against most G10 currencies, particularly the Japanese yen. The British pound strengthened after strong UK wage data.

Gold and other safe-haven assets saw modest demand as equity markets drifted and investors awaited further guidance from Fed Chair Jerome Powell and upcoming US data, including retail sales revisions.

UK Inflation Miss Fuels Rate-Cut Bets​

UK inflation cooled more sharply than expected in November, strengthening market expectations for interest rate cuts from the Bank of England.

Headline inflation slowed to 3.2%, below forecasts of 3.5% from economists surveyed by Reuters and down from 3.6% in October. This marked the lowest inflation rate since March.

Core inflation, which excludes energy, food, alcohol, and tobacco, also fell to 3.2% from 3.4%, according to the Office for National Statistics (ONS).

What Drove Inflation Lower?​

Additional downward pressure came from:

• Lower tobacco prices, following a large increase a year earlier
• Falling women’s clothing prices

However, Fitzner noted that while factory gate price increases slowed, the cost of raw materials for businesses continued to rise, highlighting ongoing pressures in parts of the supply chain.

Bank of England Cut Seen as Likely​

The inflation data followed figures showing UK unemployment rose to 5.1%, reinforcing expectations that the Bank of England will cut interest rates by 25 basis points to 3.75% at its meeting on Thursday.

Economists expect a 5-4 split among policymakers, with Governor Andrew Bailey likely to cast the deciding vote.

Chancellor Rachel Reeves welcomed the drop in inflation but warned that challenges remain.
‘I know families across Britain who are worried about the cost of living will welcome this fall in inflation. But there is more to do,’ she said.

With economic growth limited to just 0.1% in Q3, analysts argue that weakening demand and a loosening labour market are creating strong conditions for a rate cut.

‘These figures, alongside a wave of weak data, make a rate cut tomorrow look certain,’ said Suren Thiru, Economics Director at the ICAEW. ‘They also show the UK is moving towards a more manageable inflation environment.’

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 19th December 2025.

US Inflation Well Below Expectations! Fed Guidance About to Change?

An interesting week for investors, with safe haven assets and particularly metals, performing well. The best-performing assets were Palladium, Platinum, Silver and Gold, which are currently outperforming the Stock Market and the US Dollar. Analysts point towards lower inflation and the EU treading a fine line with Russia as the reason for the demand. From the currency market, the US Dollar is the best performing, while stocks have had their worst week of the month.

Though key events have taken place throughout the week which may indicate this may not be a continuing trend. These include the US inflation rate, Bank of England Rate Decision and Oils renewed decline.

US Inflation Rate (CPI)​

On Thursday afternoon, the US made public its Consumer Price Index for the first time since October 2025. Economists were expecting inflation to rise, as it has done throughout 2025. Nonetheless, the expectations were again incorrect, and inflation actually fell from 3.00% to 2.7%. Analysts deem this to be significantly lower than expectations and can potentially change the guidance they have set for the market.

With the inflation reading 0.4% lower than previous predictions analysts are contemplating whether the Federal Reserve will maintain its hawkishness. Fed indicators such as the Fedwatch Tool and the Fed Dot Plot show no major changes. These indications continue to point to only two rate cuts in 2026 and none for January.

However, with inflation falling to a much healthier level and losing its ‘stickiness’ the market view is likely to change. Considering this is the key requirement for the Federal Reserve, it is possible and many analysts have already spoken about earlier or more frequent cuts. According to the market view the Federal Reserve will either cut another 0.25% basis points in January or will be forced to make frequent cuts thereafter.

As a result, the stock market potentially may find support particularly as institutions look to take advantage of the slight discount in price. Currently, this morning the S&P 500 has risen 0.28% and the NASDAQ 0.60%. In addition, the VIX index is trading 0.75% lower which points towards a ‘risk-on’ sentiment.

HFM - S&P 500 15-Minute Chart


Technical analysts also note that the bullish price momentum has risen as the European Session edges closer. If the price momentum is maintained or rises above $25,155.15 (NASDAQ), buy signals potentially may continue to materialise.

Other Global Developments​

The US is not the only one making headlines this week. Major Central Bank decisions are also stealing the spotlight. A key decision came from the Bank of England, where interest rates were cut by 25 basis points to 3.75%. The Monetary Policy Committee vote was narrowly split, with five members supporting the cut and four opposing it.

In its statement, the BoE said inflation remains above target but will return to 2.0% faster than previously forecast, and stressed that future easing will depend on the inflation outlook. Looking ahead, the BoE is likely to maintain a dovish tone, while Morgan Stanley forecasts three rate cuts in 2026. According to Morgan Stanley these adjustments are likely to come in February, April, and June.

In contrast, the Bank of Japan chose to increase interest rates to 0.75% in order to tackle rising inflation and wages. However, even with the rate hike, the Bank of Japan’s main rate remains lower than economists’ earlier expectations from the start of 2025. In addition, the BoJ governor, Ueda, maintained a neutral tone, not indicating any imminent further hikes. As a result, the Japanese Yen along with the British Pound remain under pressure.

Key Takeaways:​

• Precious metals outperformed stocks and the US Dollar as investors sought safe havens amid easing inflation and geopolitical uncertainty.
• US inflation fell to 2.7%, well below expectations, challenging the Federal Reserve’s hawkish policy outlook. Monetary Policy Tools maintain their hawkishness but are likely to change.
• Markets increasingly expect earlier or more frequent Fed rate cuts, despite official projections still showing only two cuts in 2026.
• US equities showed early recovery signs as volatility fell and risk-on sentiment returned, supported by improving technical momentum.
• Diverging central bank policies pressured the pound and yen as the BoE cut rates and the BoJ stayed cautious.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 22nd December 2025.

Gold Climbs to All-Time High After Extreme Bullish Momentum.

Gold’s price has witnessed one of its strongest recent gains, rising by almost 2% in a short period of time. Gold now trades at an all-time high and has broken above its key resistance level at $4,353.70. All metals trade higher on Monday a few days before Christmas including the best-performing metal, Palladium.

Why is Gold’s price increasing at such speed and is the trend likely to continue in January 2026?

HFM - Gold 1-Hour Chart

The Federal Reserve and Interest Rates​

Gold has at times seen bullish impulse waves during the previous week but has been unable to maintain momentum. However, the recent inflation data and economists expecting rate cuts in 2026 are fuelling stronger momentum during today’s Asian session. The Federal Reserve in December opted for a ‘hawkish cut’, meaning they chose to cut by 0.25% but stay relatively hawkish in their guidance.

The Federal Reserve gave the impression that they believe it would be appropriate to cut on one to two occasions in 2026. However, market participants are expecting a minimum of two cuts, with many pricing in three cuts. The dovish outcome has strengthened as the US inflation rate fell from 3.00% to 2.7%, the lowest since the summer. In addition, analysts forecast the Core Consumer Price Index to fall from 3.0% to 2.6%. This continues to allow the Federal Reserve more room to maneuver.

Gold and Geopolitics​

According to analysts, the most recent demand for Gold is not derived from Central Banks and governments due to global risks. Reports indicate Gold’s demand is largely coming from large funds and institutions. Nonetheless, the geopolitical sphere is a key element further driving investors to Gold.

The war between Russia and Ukraine is still actively ongoing, even though there has been nearly a month of fairly intense negotiations involving the US, EU, Ukraine, and Russia. However, a recent important factor is developments in Venezuela.

Last week, US President Donald Trump labelled the Venezuelan government a ‘terrorist organization’ and announced a full naval blockade of oil tankers travelling to or from the country. A day earlier, reports said US ships were tracking another vessel, marking the third such incident in recent days. While experts do not rule out ground operations or airstrikes, Trump does not appear eager to further escalate the situation. That said, since September, the US has targeted more than 20 ships in the Caribbean Sea suspected of drug trafficking.

Meanwhile, volatility in the precious metals market has declined again. Data from the Chicago Mercantile Exchange (CME Group) shows that on Friday, investors held 181.09 thousand gold futures contracts and 84.84 thousand options contracts. This compares with last week’s average levels of 217.50 thousand futures contracts and 72.00 thousand options contracts.

The US Dollar - A Key Risk For Gold?​

Even though Gold’s trend is in line with most analysts’ guidance and expectations, key risks do remain. The US Dollar and Gold are known to be inversely correlated. However, the price of the US Dollar is not necessarily declining enough in order to warrant such a large price movement for Gold.

The US Dollar is witnessing a slight decline on Monday, however, it remains higher than last week’s market open price. In addition, the global stock market remains strong which again does not warrant such high demand for safe-haven assets.

For this reason, even though the trend cannot be ignored or denied, caution regarding retracements and corrections is advisable, according to most analysts. If the price is to correct, price action points towards a potential decline to the range between $4,356.40 and $4,474.80.

Key Takeaway Points:​

• Gold hit record highs, rising nearly 2% and breaking key resistance at $4,353.70, with other metals also advancing.
• Falling inflation and expected 2026 rate cuts are strengthening gold’s momentum despite the Fed’s relatively hawkish guidance.
• Geopolitical tensions, especially Ukraine and Venezuela developments, are increasing safe-haven demand from large funds and institutions.
• Correction risks remain, as the US Dollar stays firm and equities remain strong. If a retracement is to form, potential pullbacks could aim for the $4,356-$4,475 range.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 23rd December 2025.

End of Year Currency Review & Forecasts: Euro & Japanese Yen.

The Euro is the best-performing currency of 2025 while the Japanese Yen is one of the worst-performing. The Euro’s bullishness derives from the Eurozone’s expansionary fiscal policy, Dollar weakness and the demand for European stocks.

The Japanese yen, by contrast, followed a more complex narrative. The Japanese Yen was the best performing currency within the first six months due to interest rate hikes. However, the Yen was the worst performing in the second half of the year and is currently trading with a 3.30% minus.

Are the Euro and Japanese Yen’s Trend likely to continue into 2026?

The Euro & Market Forecasts​

The Euro Index, which measures the performance of the Euro against four different currencies, trades 0.15% higher. With the US Dollar Index continuing to significantly decline and European stocks maintaining their competitiveness, the Euro continues to strengthen. Many economists believe this is likely to continue in 2026, provided that the US Dollar Index continues to decline.

The European Central Bank was actually one of the most dovish in 2025 cutting interest rates on four occasions. However, the ECB has not cut interest rates for six months now and economists do not expect any cuts in the first quarter of 2026. The Eurozone’s inflation rate is currently at 2.1%, in line with the ECB’s inflation target.

In related developments, José Luis Escrivá, Governor of the Bank of Spain told journalists that he sees no reason to adjust interest rates and expects monetary policy to remain unchanged in the near term. Many other members of the ECB’s voting committee also have kept to this rhetoric. Meanwhile, across the Atlantic, many believe the Federal Reserve may be forced to cut rates more aggressively than it admits.

On the other hand, there are also negatives for the Eurozone such as tariffs and its commitment to Ukraine. Today, Chinese authorities announced the implementation of tariffs of up to 42.7% on dairy products, including cheese, milk, and cream, imported from the European Union. The decision follows the conclusion of an investigation launched in August 2024 into alleged subsidies. According to China’s Ministry of Commerce, these subsidies caused significant harm to the domestic dairy industry. The tariffs will take effect on 23 December. Companies that cooperated with the investigation will face a tariff of 28.6%, while those that did not cooperate will be subject to the full 42.7% rate.

HFM - EURUSD 1-Hour Chart


Technical analysis, mainly price action, indicates that EURUSD will maintain its bullish bias while it remains above 1.17640. However, 1.18295 is a key resistance level, which traders will be paying close attention to along with the US Dollar Index. A key support level for the US Dollar Index is 97.10.

The Japanese Yen & Government Currency Intervention​

The Japanese Yen was the worst-performing currency in the second half of 2025 after failing to meet hawkish expectations. Analysts had expected the Bank of Japan to increase rates to a minimum of 1.00%. However, the BoJ has risen to 0.75% and is reluctant to give a more hawkish outlook for the next quarter. In addition, the recent tensions with China have also dampened sentiment towards the Japanese Yen.

Today, on the other hand, the Japanese Yen is the best-performing currency for two reasons. The first is related to technical analysis and investors taking advantage of its low price while the US Dollar declines. However, a key price driver is the Finance Minister’s recent comments. The country’s finance minister, Satsuki Katayama, told journalists that the government has a ‘free hand’ to make bold decisions in order to support the currency when required.

The comments made by Mrs Katayama suggest that the Japanese government may intervene in the currency market to support the yen. This action would likely occur if the exchange rate rises above 157.00. Though it is important to note, it is not known when they will decide to do so or what price they deem to be too high.

According to analysts, the Japanese Yen can recover and perform better in 2026. However, this is only possible if the Bank of Japan takes a more hawkish approach while other global central banks do not.

HFM - USDJPY 1-Hour Chart

Key Takeaway Points:​

• The Euro was 2025’s top-performing currency, driven by Dollar weakness and strong demand for European assets.
• Policy divergence supports the Euro as the ECB pauses while the Federal Reserve faces pressure to cut rates.
• Despite trade tariffs and geopolitical risks, the Euro maintains a bullish technical and macro outlook.
• A key price driver is the Finance Minister's comments that the government can act freely to support the Yen.
• The Japanese Yen surged early in 2025 but weakened sharply after failing to meet hawkish rate expectations.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 29th December 2025.

Week Ahead: Markets Drift Into 2026.

As global markets move quietly into the New Year, 2025 comes to a close on a far steadier footing than many feared at the start of the year. Early volatility was driven by renewed US trade tariff concerns and fears that higher costs could reignite inflation while weighing on growth. That worst-case scenario ultimately failed to materialise. Tariffs were delayed or softened, while central banks pivoted towards rate cuts to offset cooling labour markets, helping global economies remain broadly resilient.

Equity markets are ending the year with strong gains, many at or near record highs. Bond markets, meanwhile, present a more mixed picture, with US and UK 10-year yields near the lower end of their 2025 ranges, while European yields remain relatively elevated. With global economic calendars unusually light, attention turns to seasonal trading dynamics, geopolitical developments, and a handful of market-moving headlines as 2026 approaches.

Trading & Market Moves: Geopolitics, Commodities, and Crypto in Focus​

Asian markets opened the week mixed, reflecting a lacklustre post-Christmas session on Wall Street and rising geopolitical tensions around Taiwan. US equity futures were little changed, highlighting the cautious tone amid thin holiday liquidity.

China’s military confirmed it had conducted joint air, naval, and rocket force drills around Taiwan, describing the exercises as a warning against ‘separatist’ movements and what it termed ‘external interference.’ Taiwan responded by placing its forces on alert, calling Beijing ‘the biggest destroyer of peace.’ The drills followed renewed Chinese anger over US arms sales to Taiwan and comments from Japan’s Prime Minister Sanae Takaichi suggesting Japan’s military could become involved if China were to take action against the island.

Despite the elevated rhetoric, market reactions remained contained. Taiwan’s benchmark index rose 0.8%, Hong Kong’s Hang Seng gained 0.3%, and China’s Shanghai Composite added 0.3%. Japan’s Nikkei slipped 0.2%, while South Korea’s KOSPI stood out with a near 2% rally, supported by strength in chipmaker stocks. Australia’s ASX 200 edged lower by 0.3%.

Commodities: Energy and Precious Metals React​

Commodity markets reflected a mix of geopolitical risk and positioning adjustments. Gold slipped 0.4% to around $4,535 per ounce, while silver surged nearly 3% to record levels, supported by ongoing supply constraints. Both precious metals remain strong performers for the year, benefitting from safe-haven demand, expectations of further Fed rate cuts in 2026, and a weaker US dollar outlook.

Oil prices rebounded modestly after sharp losses late last week. WTI crude traded near $57.30 per barrel, while Brent crude rose towards $60.80, as fading hopes of a Russia-Ukraine peace deal added a risk premium back into energy markets. Over the weekend, Russia attacked a major heating and power facility in Ukraine’s Kherson region, while Ukraine struck an oil refinery in Russia’s Samara region, developments that underscore how fragile diplomatic progress remains despite signals of movement towards a potential peace framework.

Crypto: Bitcoin Reclaims Momentum​

Cryptocurrencies outperformed, benefitting from rising geopolitical uncertainty and higher energy prices. Bitcoin climbed over 2% to trade above $90,000, lifting broader crypto sentiment. Major altcoins including Ether, XRP, and Solana posted gains of 3% or more. With liquidity thin, price moves have been amplified, but the resilience of crypto assets continues to attract traders seeking alternatives to traditional risk assets.

FX: Dollar Softens Into Year-End​

In currency markets, the US dollar weakened slightly, with USD/JPY slipping towards 156.28, while the euro held steady near $1.1770. FX trading remains subdued, though expectations of further Fed easing in 2026 continue to cap dollar upside.

Santa Claus Rally and Thin Holiday Trading​

Markets remain focused on the traditional Santa Claus Rally, covering the final five trading days of December and the first two sessions of January. Historically, this period has delivered positive equity returns nearly 80% of the time, though light volumes mean moves can be exaggerated in either direction.

This year, the rally faces headwinds from a more cautious Fed outlook, lingering inflation concerns, and recent volatility in technology stocks. Still, year-end window dressing and portfolio rebalancing may offer short-term support to market leaders.

North America: FOMC Minutes in the Spotlight​

The US data calendar is sparse, leaving Tuesday’s FOMC minutes as the key macro event. While unlikely to shift expectations for a January pause, the minutes will be examined for details behind the Fed’s more hawkish 2026 outlook, including concerns over inflation persistence and financial conditions.

Initial jobless claims and the Chicago PMI round out the week, though clearer economic signals will emerge only in early January with payrolls, ISMs, and labour market data.

Europe: PMIs and Growth Risks​

European markets briefly reopen before closing again for New Year celebrations. Final Manufacturing PMIs are expected to confirm ongoing contraction across the Eurozone, with Germany remaining a focal point amid weakening industrial activity. In the UK, modest manufacturing expansion contrasts with labour market softness, keeping the Bank of England on track for further easing in 2026.

Asia: China PMIs and Regional Data​

China’s official and private PMIs will provide key insight into year-end momentum, with manufacturing and services activity expected to remain under pressure amid trade tensions and property-sector challenges. Elsewhere in Asia, data from Korea, India, and Southeast Asia will offer additional clues on regional growth trends as the year closes.

Transition Week Into 2026​

The final trading week of 2025 is less about decisive market direction and more about positioning, risk management, and headline sensitivity. Thin liquidity magnifies reactions to geopolitical developments, commodity price swings, and crypto momentum, while meaningful trend confirmation is likely to wait until institutional participation returns in early January.

As markets drift into 2026, traders and investors alike are balancing cautious optimism with unresolved risks, setting the stage for a potentially volatile start to the new year.

Best of luck in the trading year ahead.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 6th January 2026.

Nikkei 225 Leads Amid US-Japan Cooperation and BOJ Policy.

The Nikkei 225, along with Asian stocks more broadly, has been among the best-performing markets in the first week of 2026. These instruments have risen over 3.5% in recent days, more than double the gains of US and EU assets. Japanese Stocks have been increasing in value for 3 consecutive years, and with the index starting the year on a high, traders are paying close attention to developments.

Economists note that stocks are performing well globally and the bullish price movement is not solely seen in Japan. However, certain developments are favouring Japan in absence of economic releases due to the holidays. For example, the growing relationship between the US and Japan.

HFM - NIKKEI225 1-Hour Chart

Japan Does Not Condemn US Military Action In Venezuela​

US President Donald Trump has invited Japanese Prime Minister Sanae Takaichi for an official visit to the United States later in 2026, likely in the spring, aimed at strengthening economic and security ties amid rising tensions in East Asia. In addition to this, Japan has chosen not to condemn the US actions in Venezuela, unlike China and Russia.

Again this can prompt more favourable relations in the future, such as lower tariffs and more trade. A vital factor for the Japanese economy.

Bank of Japan & Stocks​

In addition to the above, factors from 2025 also continue to support the Nikkei 225. This primarily includes the higher wages which has been agreed with trade unions, and the Bank Of Japan’s dovishness. Market participants in the first few months of 2025 advised they expect the BOJ’s rate to rise to 1.00%. However, rates have only risen to 0.75% and the committee refuses to give concrete guidance for further rate hikes.

As a result, the dovishness of the Central Bank continues to support Japanese stocks. However, this is something which could potentially change in the upcoming months. If the BOJ does take a more hawkish tone, then the stock market may come under some pressure unless wages also increase.

Are Oil Prices About to Fall and What Would That Mean for Stocks?​

Oil is expected to be one of the most closely watched assets in 2026. Traders should be mindful that movements in oil have a significant impact on inflation, interest rates, and consumer demand. As a result, fluctuations in oil prices can strongly influence both currency and equity markets.

Last Saturday, President Maduro and his wife, Cilia Flores, were arrested and transferred to a pretrial detention facility in Brooklyn. They could face charges related to narcoterrorism and weapons possession as early as today. While this escalation in political tensions briefly affected investor sentiment at the start of the trading session, it has not triggered a wave of new trades yet.

This muted market reaction is likely due to the fact that the US blockade on oil exports remains in place, preventing tankers from leaving the country’s ports. Meanwhile, OPEC+ agreed on Sunday to keep output unchanged for February and March despite disagreements between Saudi Arabia and the UAE, while reaffirming its flexibility to reinstate previously lifted production cuts of 1.65 million and 2.2 million barrels per day.

If these developments eventually prompt higher supply, the price of crude oil can decline further. If prices and inflation falls, the global stock market potentially can rise, particularly if interest rates also fall.

HFM - Crude Oil 1-Hour Chart

Key Takeaways:​

• The Nikkei 225 and Asian stocks have started 2026 strongly, rising over 3.5%.
• Closer US-Japan ties and Japan’s neutral stance on Venezuela support positive investor sentiment.
• The Bank of Japan’s cautious, dovish policy continues to underpin stock market strength.
• Oil price movements remain critical, influencing inflation, interest rates, and global equity performance.
• Maduro’s arrest and OPEC+ output decisions have had limited immediate impact on markets.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

 

[HFM]

Date: 7th January 2026.

US Stock Futures Steady as Investors Await Key Jobs Data After Record Wall Street Rally.

US stock futures were little changed early Wednesday, as investors paused after Wall Street pushed deeper into record territory and shifted focus towards a crucial week of US labour market data that could influence expectations for Federal Reserve policy.

Futures linked to the Dow Jones Industrial Average rose 0.1%, while S&P 500 futures traded flat. Nasdaq 100 futures slipped 0.1%, reflecting cautious positioning following Tuesday’s strong rally. US stocks advanced during regular trading despite lingering geopolitical tensions after US military action in Venezuela over the weekend.

The Dow Jones Industrial Average crossed the 49,000 mark for the first time, securing its second consecutive record close. The S&P 500 also finished at an all-time high, continuing its move towards the 7,000 level.

Economic Data Takes Centre Stage as Jobs Reports Approach​

Attention is now firmly on a packed US economic calendar, as data releases begin to normalise following recent disruptions. On Tuesday, figures showed signs of slowing momentum in the services sector, with S&P Global’s final Services PMI for December marking the weakest expansion in eight months.

Today, investors are focused on the release of ADP’s monthly report on private-sector employment. The report has shown job losses in three of the past four months, though forecasts point to a modest rebound in hiring. Markets will also assess November’s JOLTS data, which tracks job openings, voluntary quits, and layoffs, key indicators of labour market tightness.

These releases set the stage for Friday’s December nonfarm payrolls report, which investors see as a critical gauge of whether the US economy is cooling enough to support potential changes in Federal Reserve policy.

CES 2026 Highlights Debate Over Tech Sector Outlook​

The CES 2026 technology conference continues to shape market sentiment, as ambitious forecasts from industry leaders contrast with more cautious assessments from Wall Street.

Nvidia remains a focal point, with analysts divided over whether the stock is approaching bubble-like valuations or entering another phase of rapid growth fuelled by demand for artificial intelligence.

Japanese Stocks Post Best Start to a Year in Decades​

In Asia, Japanese equities recorded their strongest start to a year in several decades, supported by heavy buying from overseas investors and domestic individuals.

The Topix and Nikkei 225 extended gains on Tuesday, lifting their two-day advances to 3.8% and 4.3%, respectively. Bloomberg-compiled data showed this was the strongest performance for the first two trading days of a year since at least 1990.

Despite the rally, concerns persist about the sustainability of the AI-driven surge and ongoing geopolitical risks. Analysts said attention surrounding Venezuela is likely to shift towards the responses of China, Russia, and India. Masayuki Doshida, senior market analyst at Rakuten Securities, said that ‘depending on how developments unfold, this could become a geopolitical risk that draws attention’.

Valuations and Retail Buying Support Japan’s Equity Rally​

Buying has been concentrated in large-cap Japanese stocks. Compared with US equities, Japanese stocks continue to trade at lower price-to-earnings ratios, supporting foreign investor demand, according to Hideyuki Ishiguro, chief strategist at Nomura Asset Management.

Some analysts also pointed to increased retail participation, as individual investors add funds to tax-free NISA accounts at the start of the new year.

Market optimism has also been supported by expectations of improving corporate earnings, stronger corporate governance, and Prime Minister Sanae Takaichi’s pro-stimulus policies, alongside resilience in US markets and hopes for US interest-rate cuts.

Much of the earnings recovery has already been priced in, Doshida said, adding that if profits exceed expectations, the Nikkei 225 could rise to 55,000 or higher. The index closed at a record 52,518.08 on Tuesday.

Gold Prices Ease as Focus Shifts to US Data​

Gold prices edged lower as investors looked beyond heightened geopolitical tensions and refocused on upcoming US economic data.

Bullion traded near $4,470 an ounce after rising more than 4% over the previous three sessions. President Donald Trump said Venezuela would deliver up to 50 million barrels of oil to the US, while the White House declined to rule out military force to acquire Greenland. China, meanwhile, imposed export controls on goods shipped to Japan with potential military uses.

Gold recently recorded its strongest annual performance since 1979, supported by central-bank buying and inflows into bullion-backed exchange-traded funds.

Silver posted an even sharper rally last year, rising nearly 150% amid supply constraints and concerns over potential US import tariffs. Silver fell as much as 2.2% on Wednesday but remains up 12% so far this year, supported by strong retail demand, particularly in China.

Commodity Index Rebalancing Poses Near-Term Risk​

Analysts warned that near-term pressure could emerge from commodity index rebalancing, as passive funds adjust holdings to reflect new weightings.

Citigroup estimated that rebalancing across the two largest commodity indices could lead to outflows of about $6.8 billion from gold futures and a similar amount from silver.

By early afternoon in Singapore, gold was down 0.6% at $4,466.04 an ounce. Silver fell 1.9% to $79.69, platinum dropped 4.2%, and palladium declined 2.9%.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click HERE to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!

Click HERE to READ more Market news.

Andria Pichidi
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.