Canada’s housing starts in December hit 282.4K, exceeding the expected 260K. This good news indicates a strong finish for the construction sector this year. In the currency market, the USD/JPY dropped to 158.00 as the Yen gained strength. Meanwhile, the strengthening US Dollar impacted the EUR/USD and GBP/USD pairs. Gold prices fell below $4,600 per troy ounce, influenced by geopolitical events and a stronger Dollar. Cryptocurrencies like Bitcoin, Ethereum, and XRP are maintaining important support levels despite a decline in retail demand. Bitcoin stays above $95,000, while Ethereum and XRP trade closely around average moving points.

Focus On Upcoming Economic Indicators

Looking ahead, important US economic data and decisions from the Bank of Japan (BoJ) are expected to shape market movements. The US Personal Consumption Expenditures (PCE) and Purchasing Managers’ Indices (PMIs) will set expectations for Federal Reserve actions, especially with the BoJ focusing on guidance after recent elections. In the cryptocurrency scene, Dash has risen in value despite market fluctuations, reaching an intraday high of $96.85. This increase is linked to growing retail interest, as indicated by a rise in futures open interest to $165 million. The unexpected rise in Canadian housing starts to 282.4K, a level not seen consistently since the 2021 boom, suggests surprising economic strength. With Canadian inflation data from late 2025 lingering around 2.9%, it seems likely that the Bank of Canada will postpone any planned rate cuts. This makes buying call options on the Canadian dollar or selling USD/CAD futures an appealing strategy for the coming weeks.

Market Strategies And Reactions

Fed Governor Bowman’s worries about the labor market feel valid, especially after the December 2025 nonfarm payrolls report showed job growth slowing to 160,000. Despite this, the dollar remains strong, creating uncertainty ahead of the important US PCE inflation data next week. To take advantage of potential market movements, we suggest buying volatility through options straddles on major pairs like EUR/USD. There is a noticeable difference in precious metals, with silver reaching a record $93.75 while gold weakens below $4,600. This shift has lowered the gold-to-silver ratio to 49, well below the 10-year average of around 75 observed earlier in the 2020s. This presents a great opportunity for a pairs trade using futures to buy gold and short silver, anticipating a return to historical averages. We are monitoring the USD/JPY as it tests the 158.00 level, a range that often prompts intervention from Japan’s Ministry of Finance, as seen in 2024. With the Bank of Japan meeting next week, implied volatility on yen options is high. Traders might consider buying short-dated USD/JPY put options to bet on a sudden decline due to potential intervention. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now