South Africa’s trade balance in December was 23.18 billion rand, down from 37.7 billion rand the month before. This change shows a shift in trade activity. Gold prices have dropped, falling below $5,000 per troy ounce. This decline is due to profit-taking and the rising value of the US dollar. Increased US Treasury yields have also played a role in lowering gold prices.

Stellar Declines

Stellar has seen its value dip to below $0.20, hitting a three-month low. This decline comes with reduced open interest and negative funding rates in the derivatives market. Microsoft faced a significant sell-off, losing $400 billion in market value, the second-largest drop on record. This loss impacted other market indices, even though it was specific to Microsoft. Bitcoin, Ethereum, and Ripple have also fallen. Bitcoin is close to its November lows at $80,000, while Ethereum has dropped below $2,800, reflecting increased downward pressure in the blockchain market. The unexpected appointment of a new, more hawkish Fed Chair is driving a strong rally in the US dollar. His past comments suggest he is less patient with inflation, leading to higher US Treasury yields. This trend will likely affect all markets in the coming weeks.

Dollar Strength and Commodity Impact

The strong dollar creates trading opportunities with commodity-linked currencies. The South African rand is particularly weak, with its trade surplus falling nearly 40% in December 2025. This decline is due to reduced Chinese demand for its industrial metals. Buying call options on the USD/ZAR pair may be a wise strategy as we anticipate further weakness in the rand. As a result, major currency pairs like EUR/USD and GBP/USD are breaking below important support levels set in the last quarter of 2025. We believe this is not just a minor correction, and selling futures contracts on these pairs is a direct way to capitalize on the trend. The US Dollar Index (DXY) looks set to reach its highest level in almost a year. A risk-off mood is affecting stock markets, with the tech sector—which previously led the 2025 rally—showing serious signs of trouble. Microsoft’s massive single-day loss is a significant warning, suggesting that market leadership is faltering. We should consider buying put options on the Nasdaq 100 index to guard against a more extensive market decline. This market is challenging for commodities, with gold sharply rejected from the $5,000 per ounce mark. The combination of a stronger dollar and rising bond yields is creating pressure on precious metals, and oil is showing signs of a downturn due to global growth concerns. Shorting commodity futures or buying puts on commodity ETFs seems like a smart move. Lastly, market volatility, as indicated by the VIX index, has spiked by over 30% this past week. This increase shows that market stress is rising quickly. Purchasing call options on the VIX could provide a profitable hedge if uncertainty continues to grow. Create your live VT Markets account and start trading now.

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