Japan’s retail trade rose more than expected in November, showing a year-on-year growth of 1%, beating the forecast of 0.9%. This indicates that the retail sector is performing better than initially thought. The USD/CAD is close to five-month lows due to differing monetary policies from the Bank of Canada and the Federal Reserve. Additionally, gold prices have fallen from record highs as investors take profits during a quiet trading period.

The GBP/USD and S&P 500 Forecast

The GBP/USD has dipped slightly as trading slows down for the holiday season. The S&P 500 is expected to see strong growth in 2026. Bitcoin’s value has dropped below $87,000 because of ETF outflows totaling $188.64 million and reduced activity from large investors, known as “whales.” For advanced economies, the economic outlook for 2026-2027 looks strong. Avalanche is struggling around the $12 mark after Grayscale’s updated ETF filing. Traders are closely watching how this may affect its future performance. In 2025, several brokers are noted for their appealing options, including low spreads, high leverage, and regulated offerings, tailored to meet the diverse trading needs around the globe. FXStreet’s goal is to provide accurate information without tailored financial advice.

Dollar Weakness and Market Predictions

Currently, the US Dollar’s weakness is the main factor driving trades as we head into the new year. Markets anticipate a strong chance of Federal Reserve interest rate cuts in early 2026, with the CME FedWatch Tool indicating an 85% likelihood of a cut by March. This expectation is likely to keep pressure on the dollar against other major currencies. The recent drop in gold from its peak above $4,520 seems to be a pause for profit-taking rather than a downward trend. We see this as a chance to enter long positions through call options, especially since central banks remain strong buyers. Trading below the $4,500 level is a key psychological entry point for potential future gains. For stock traders, the positive outlook for the S&P 500 in 2026 suggests buying call options on major indexes. Implied volatility is historically low, with the VIX index around 11.5 this past week, making options more affordable. This environment is favorable for positioning ahead of expected growth next year. Reflecting on the past, we find similarities to the current situation from our viewpoint in late 2025. The stock market rally after the 2016 US election may serve as a model for a “run it hot” scenario, while the weakness of the US Dollar and the rise in gold mirror the Fed’s policy shift in 2019. The slightly better-than-expected data on Japanese retail sales, along with core inflation staying above the Bank of Japan’s 2% target for more than 18 months, suggests a possible policy change. This makes long positions on the Yen an interesting, though contrarian, trade. Meanwhile, the difference in policies between the Bank of Canada and the Fed continues to boost the Canadian Dollar, making it a preferred choice against the USD. It’s essential to keep in mind that markets are currently thin due to holiday trading, which can amplify movements. The recent Bitcoin ETF outflows, pushing prices below $87,000, indicate that some speculative excitement is dissipating. The true test of these trends will emerge in the first full week of January 2026 when trading volumes return to normal. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now