The price of oil has increased, driven by positive data from China’s manufacturing sector, despite low trading volumes due to the year-end holidays. Meanwhile, the USDJPY pair has experienced a notable decline amid expectations of an interest rate hike by the Bank of Japan (BoJ) in January, creating tensions in the global currency market as the new year approaches.
GOLD
On Tuesday, December 31, 2024, gold prices exhibited volatility amid pressures stemming from expectations of a slower decline in Federal Reserve interest rates in 2025. Nonetheless, gold remains a strong attraction as a precious metal, bolstered by its status as a safe haven amidst ongoing tensions related to the Russia-Ukraine conflict and ongoing issues in the Middle East.
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The volatility in gold prices is anticipated to continue due to the significant moments unfolding.
OIL
During the Asian trading session, oil prices managed to achieve gains, continuing the upward trend from the prior two days, reaching $71.65 per barrel. This rise is supported by data from China’s manufacturing sector, which enhances market sentiment. However, trading volumes remained thin because of the holiday season, and profit-taking activities may hinder further increases.
China’s manufacturing sector reported expansion for the third consecutive month in December, although growth was slower than expected. This data provides hope for China’s economic recovery, crucial for the outlook of global oil demand.
EURUSD
The EURUSD pair saw a slight increase at the beginning of the trading day on Tuesday, recovering from declines during the previous session. The US dollar weakened as a result of falling yields on US government bonds, with 2-year and 10-year bonds dropping to 4.24% and 4.53%, respectively.
However, the strengthening of EURUSD appears limited as the European Central Bank (ECB) maintains a dovish stance regarding future interest rate policies, reflecting a cautious outlook for the Eurozone economy.
GBPUSD
Similar to EURUSD, the GBPUSD currency pair recorded a modest increase during Tuesday’s trading as the US dollar weakened in response to declining yields on government bonds, with 2-year and 10-year bonds at 4.24% and 4.53%.
Nevertheless, the strengthening of the Pound Sterling seems constrained due to rising expectations for dovish policies from the Bank of England (BoE) for the year 2025.
USDJPY
The USDJPY pair showed a significant drop on Tuesday during the Asian session, reaching a new daily low of 156.141. This decline was driven by the strengthening of the Japanese yen due to expectations that the Bank of Japan (BoJ) will raise interest rates in January.
Additional support came from the potential weakness of the US dollar, influenced by falling yields on US government bonds, with the 2-year and 10-year yields at 4.32% and 4.62%, respectively.
NASDAQ
The Nasdaq index faced selling pressure leading up to the European trading session, as Wall Street experienced sharp declines following year-end profit-taking. S&P 500 futures and Nasdaq 100 futures fell by 0.2%, while technology stocks like Apple and Microsoft also recorded downturns. Higher bond yields have further pressured stocks as investors shifted their interest toward bonds as a safer alternative.
