Japan’s foreign investment in stocks plummeted from ¥528.3 billion to ¥-1 billion by December 19, signaling a major change in how investors view Japanese markets. The USD/CAD is near a five-month low, benefiting from differences in policies between the Bank of Canada and the Federal Reserve. Meanwhile, gold is retreating from its record highs as investors take profits during quieter trading times.

Currency And Commodity Trends

The GBP/USD pair is slightly moving as holiday trading slows, hovering around 1.3500. Silver is rising for the fourth straight day, driven by hopes for Federal Reserve easing and its status as a safe-haven asset. On Christmas Eve, the EUR/USD is moving sideways and struggling for direction below 1.1800 with less trading activity. Gold is down from its highs, settling under $4,500, partly due to ongoing US Dollar weakness. Bitcoin is trading just below $87,000, following significant ETF outflows and reduced activity from major investors, known as whales. Recent data shows a continued outflow from US-listed spot ETFs, amounting to $188.64 million on Tuesday for the fourth consecutive day. Avalanche is around $12 as Grayscale updates its ETF filing with the US Securities and Exchange Commission. The market remains under pressure after a slight decline from the previous day.

Market Sentiments And Predictions

We are witnessing a notable shift in attitude toward Japanese stocks. The drop in foreign investment to a negative position is a serious warning, especially after the strong inflows seen in 2023 and 2024. This could signal a potential near-term peak, making put options on the Nikkei 225 an appealing hedge for early 2026. The US Dollar’s weakness is expected to persist into the new year due to anticipated easing from the Federal Reserve. Recent Core PCE data from November 2025 shows inflation cooling toward the 2% target. The market is pricing in rate cuts for the first half of 2026, favoring short positions on the dollar against currencies from central banks like the Canadian Dollar that are more hawkish. Gold’s pullback from its record high above $4,520 should be seen as a consolidation phase rather than a reversal. Strong support remains from the expected Fed rate cuts. We experienced similar profit-taking during the 2024 bull run before prices increased. Any dip below $4,450 is viewed as a buying opportunity for call options expiring in the first quarter of 2026. In the cryptocurrency market, the recent four-day streak of ETF outflows indicates institutional caution as we approach the end of the year. This contrasts sharply with the strong inflows that spurred the market following ETF approvals in early 2024. Until we see a steady return of positive flows, we suggest avoiding long positions and considering protective puts on major crypto assets like Bitcoin. Overall market activity is quiet for the holidays, but low liquidity may lead to larger price swings if unexpected news arises. We are monitoring the CBOE Volatility Index (VIX), which is near multi-year lows, indicating market complacency. Traders should be cautious and may want to buy inexpensive, out-of-the-money options to guard against sudden volatility spikes when full trading resumes in January. Create your live VT Markets account and start trading now.

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