In November, South Korea’s Producer Price Index (PPI) rose by 0.3%, up from last month’s 0.2% increase. This index shows how prices for goods and services change, which affects the economy. In the currency market, the GBP/JPY pair climbed above the mid-208.00s after the Bank of Japan raised rates by 25 basis points. Despite a stronger national Consumer Price Index, the Japanese Yen weakened as traders awaited more policy news.

Australian Dollar Stability

The Australian Dollar stayed stable, thanks to a hawkish outlook from the Reserve Bank of Australia. The USD/CAD traded below 1.3800 amid talks of possible rate cuts from the Federal Reserve. Gold prices dipped below $4,350 due to profit-taking and low long liquidation. Meanwhile, cryptocurrencies like Pump.fun, Pudgy Penguins, and Hyperliquid saw double-digit declines in a bearish market. The Bank of England cut rates to 3.75%, a decision that sparked some internal disagreement. Ripple’s value remained at $1.82, influenced by low retail interest in the larger cryptocurrency market.

Federal Reserve Rate Cuts Expectation

On December 19, 2025, the main focus in the markets is the expectation of Federal Reserve rate cuts. November’s US Consumer Price Index showed a rate of 2.7%, reinforcing this expectation. The derivatives market now indicates more than an 85% chance of a 25 basis-point cut by the Fed in early 2026, putting pressure on the US dollar. This contrasts with other central banks, which have a more aggressive stance. The European Central Bank has raised its inflation forecasts, and the Reserve Bank of Australia remains firm in its policy, suggesting strength for the Euro and Australian Dollar. Recently, the yield gap between US and German 2-year bonds narrowed by 30 basis points, benefiting long EUR/USD positions. The Japanese Yen has weakened, despite the Bank of Japan’s recent rate hike, indicating that traders viewed the move as too small. Historical policy shifts from the BoJ suggest that the market does not expect a significant tightening cycle, making carry trades like long GBP/JPY appealing, even at high levels. Commodity markets are influenced by specific conditions. Expectations of a Russia-Ukraine peace deal are keeping WTI crude oil under $56, and implied volatility in oil options spiked over 15% in the past two weeks, hinting at anticipated price changes. Gold’s drop below $4,350 amid Fed easing expectations is notable, suggesting traders are either booking profits or believe a soft economic landing will lessen demand for safe-haven assets. Create your live VT Markets account and start trading now.

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