In December, South Korea’s Consumer Price Index rose by 0.3% from the previous month, beating expectations of 0.2%. This uptick goes against anticipated economic trends. The economic forecast for advanced countries in 2026-2027 looks strong, with many positive factors from 2025 expected to persist. In the crypto market, growth in 2026 may be fueled by regulatory changes and the adoption of new technologies.

Currency Market Movements

In the currency market, the USD/JPY remains steady around 156.00, despite the challenges the yen is facing. The AUD/USD faced difficulties at a key technical level, affected by low market trading during the holiday period. After the release of the Federal Open Market Committee (FOMC) minutes, the EUR/USD dropped below 1.1750. Meanwhile, the Canadian dollar showed little movement as year-end trading slowed down. Despite these economic conditions, gold prices stayed stable above $4,350 by year’s end. Ethereum held above $2,900, even with increased selling pressure, indicating strength in the cryptocurrency market. A guide on the best brokers for 2025 highlights features like low spreads and high leverage, aiding traders in finding cost-effective opportunities.

Impact of FOMC Minutes

As holiday trading reduces market liquidity, we should be cautious of exaggerated market moves due to low volume. The latest FOMC minutes show a readiness to cut rates, but South Korea’s higher-than-expected inflation is a minor warning sign. This creates a classic tension between expectations for a softer monetary policy and ongoing price pressures as we enter January. The Fed’s dovish stance is the main theme, with the minutes reinforcing that officials are prepared to further ease policy. Currently, markets are factoring in over 100 basis points of rate cuts for 2026, creating a favorable environment for riskier assets. This suggests that buying call options on major indices like the Dow Jones in the first quarter could be a smart strategy. However, we cannot overlook inflation risks that might delay or limit the extent of these cuts. While the South Korean data is minor, it echoes the persistent inflation seen in the US at the end of 2023, which postponed that era’s rate-cut cycle. The latest US Core PCE data for November 2025 remains at 2.8%, indicating inflation is still above the Fed’s target. This makes put options on long-duration bonds a reasonable hedge. Volatility is notably inexpensive right now, providing a great opportunity for traders in derivatives. The CBOE Volatility Index (VIX) is near a historically low level of 13, making it cost-effective to buy options contracts. This situation is perfect for purchasing straddles or strangles on key currency pairs, betting on breakouts from tight holiday ranges once full market activity resumes next week. With the potential for a weaker US Dollar and lower real yields, assets like Gold are looking appealing. Gold remains strong above $4,350 an ounce, making call options a way to gain leveraged exposure to possible future gains from the Fed’s policy stance. Additionally, with EUR/USD nearing 1.1750, long call positions could pay off if the dollar weakens as expected in early 2026. Create your live VT Markets account and start trading now.

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