Japan’s construction orders fell by 10.1% in October, down from a previously reported growth of 34.7%. This significant decline points to difficulties in the construction industry for that month. In other economic news, Canada’s GDP is expected to grow in the third quarter after shrinking in the previous quarter. In Germany, retail sales rose by 0.9% year-on-year in October, a slight increase from the previous 0.8%.

The Yen’s Movement

The Japanese yen remains stable against the US dollar, with limited risks of further decline. Gold prices have stayed steady below $4,200, buoyed by expectations of a Federal Reserve rate cut in December. Zcash, a privacy-focused cryptocurrency, may face troubles with a potential 30% drop due to increasing retail trading volume. It has already seen over a 17% loss this week as demand in shielded pools remains weak. US financial markets had reduced hours on Black Friday after Thanksgiving. Investors were left to consider the impact of the UK budget and stock market trends, with various insights offered to guide traders for 2025.

Japan’s Economic Indicators

The sharp decline in Japan’s construction orders raises alarms for the coming weeks. A drop to -10.1% year-over-year, particularly after a significant 34.7% gain the month before, indicates a serious contraction in an important sector. This trend may signal a broader slowdown for Japan. This disappointing data supports continued yen weakness. The Bank of Japan is unlikely to tighten its policy, which has persisted since the high inflation period of 2023-2024. Thus, there is potential to use derivatives to short the yen against the U.S. dollar. Purchasing call options on USD/JPY might yield significant benefits if this economic weakness extends into the new year. In the US, expectations for a Federal Reserve rate cut in December remain strong, supporting gold and other assets. Recent inflation data indicates a steady decline, with the Core PCE Price Index, the Fed’s favored measure, at 2.5% for the last quarter. For traders, going long on gold futures or purchasing call options on gold ETFs could be appealing, especially as gold prices stabilize below $4,200. Concerns about a global slowdown are reflected in the bearish outlook for WTI crude oil. Weaker data from major economies like Japan and Germany has caused global oil demand growth to slow to about 1.1 million barrels per day in 2025, down significantly from earlier post-pandemic rates. In this context, buying put options on major oil producers or energy ETFs could provide a good hedge. Meanwhile, Europe is also facing challenges, with German retail sales slowing and the EUR/USD struggling to stay above 1.1600. The European Central Bank is stuck between persistent inflation and a stagnating economy. This situation may result in poor performance in European equities, making short positions on the DAX index through futures a sensible strategy. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now