Continuing jobless claims in the United States dropped from 1.923 million to 1.866 million as of December 19. This decrease points to possible improvements in the US labor market as the year comes to a close. Currency changes show a shifting financial scene. The Pound Sterling weakened against the US Dollar, testing support levels near 1.3450, while the EUR/USD pair rebounded towards the 1.1750 area during year-end trading.

Commodities And Cryptocurrencies

Commodities and cryptocurrencies had mixed results. Gold is trading close to $4,300, extending its December gains despite some profit-taking. Bitcoin, Ethereum, and Ripple remain steady, with chances for further gains. The economic forecast for advanced countries in 2026-2027 looks strong, building on the resilience seen in 2025. Possible growth drivers include supportive conditions and new regulations in the crypto market. In 2025, the crypto market faced volatility due to regulatory shifts, the rise of Digital Asset Treasuries, and more widespread use of AI and tokenization of Real-World-Assets. The outlook for 2026 is positive amid these ongoing changes. The drop in continuing jobless claims to 1.866 million is a strong sign for the US economy as we end 2025. This number is close to its lowest point of the year, indicating a tight labor market that may slow the Federal Reserve’s rate cuts sooner than expected. We see this as a chance to position for dollar strength against the Euro and Pound in the first quarter of 2026.

Anticipation Of Volatility

With thinner holiday trading volumes, volatility has been low, as shown by the VIX index hovering just above 12. However, we expect volatility to increase sharply in January when institutional traders return to reshape their portfolios for the new year. Buying VIX call options or at-the-money straddles on major indices could be an affordable way to prepare for this change. The US Dollar Index’s dip below 98.30 seems temporary, likely due to year-end profit-taking. Given the strong job data, we see this as an opportunity to buy short-dated call options on the dollar index. Fed funds futures currently suggest almost a 70% chance of a rate cut by the end of March 2026, a view we think is too optimistic and will need adjustment. Gold’s pullback to the $4,300 range should be seen as a buying opportunity rather than a trend reversal. The metal is on track for its fifth consecutive monthly gain, supported by ongoing central bank purchases, which reached a record 1,037 tonnes according to the latest 2024 data. We can use bull call spreads to gain long exposure while keeping our initial costs low. The positive outlook for 2026, along with favorable developments for crypto in 2025, such as new ETF approvals, hints at a risk-on environment returning soon. Bitcoin has been establishing a base, and we anticipate a potential rebound in early January. Near-term call options on Bitcoin or Ethereum could take advantage of a quick upward move as new capital flows in for the year. Create your live VT Markets account and start trading now.

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