Initial jobless claims in the United States hit 214,000 for the week ending December 19, which is lower than the anticipated 223,000. This suggests that the labor market remains stable. The USD/CAD exchange rate is close to five-month lows, affected by differing policies from the Bank of Canada and the Federal Reserve. Gold prices have fallen from recent highs due to profit-taking in a quieter trading environment.

The GBP/USD Pair

The GBP/USD pair saw a slight decline because of lower market activity during the holiday season, hovering around 1.3500. Bitcoin is trading at about $86,770, with increased withdrawals from U.S.-listed ETFs and reduced activity from large traders, known as whales. Looking ahead to 2026, advanced economies are expected to perform well, supported by trends from 2025. However, Avalanche’s market performance is struggling as Grayscale submits an updated form for ETF conversion to the U.S. SEC. This information is not a financial investment recommendation. Readers should conduct their own thorough research. Investing involves risks, including the potential loss of principal, and any losses are the investor’s responsibility. The recent jobless claims data from December 19, with 214,000 new claims, exceeded expectations, suggesting a robust labor market. This makes it difficult to predict the timing of the Federal Reserve’s expected rate cuts in 2026. Given the market’s aggressive easing cycle pricing, we should consider using options to protect ourselves against any unexpected hawkish moves from the Fed in the new year.

Gold Market Trends

Gold prices have retreated below $4,500 after reaching all-time highs, which is a common occurrence due to profit-taking in the lower-volume holiday market. The ongoing support from a weak U.S. Dollar is still strong, as the Dollar Index (DXY) has struggled to stay above 95 for the past quarter. Any further dips towards the $4,450 level should be seen as buying opportunities, as the trend is likely to remain upward through 2026. With the S&P 500 close to its recent peak of 6,150, the bullish long-term outlook for 2026 remains unchanged. However, trading volumes are very thin right now, which means that small trades can cause significant price changes. We should be careful about trying to chase new highs this week and instead consider selling some short-dated covered calls to earn income while we wait for trading volumes to increase in January. The differences between the Bank of Canada and the Fed are becoming more significant, pushing USD/CAD to five-month lows. While U.S. inflation has dropped to near 2.5%, the latest Canadian CPI report shows inflation still stubbornly above 3.0%. This suggests that the BoC may be slower to reduce rates than the Fed, supporting a bearish view on the U.S. dollar compared to the Canadian loonie. Bitcoin’s drop below $87,000 is closely linked to four consecutive days of withdrawals from major spot ETFs, amounting to over $188 million this week. This reverses the strong inflow trend we saw in the second half of 2025 and indicates that large players are taking profits before year-end. We can expect this weakness to continue until liquidity improves, creating a potential opportunity to buy protection or short the market into early January. Create your live VT Markets account and start trading now.

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