In November, Mexico’s fiscal balance fell to -200.52 billion pesos, down from -16.75 billion.
Mexico’s fiscal balance has sharply worsened, with a deficit of -200.52 billion pesos in November, up from -16.75 billion pesos. This raises concerns about the country’s economic health.
As the year wraps up, analysts are closely watching any developments that may affect Mexico’s financial stability and policy direction. Changes in the fiscal situation could influence the overall economic outlook for Mexico.
The Canadian dollar stays stable against the US dollar with low market activity as year-end nears.
The Canadian Dollar (CAD) held steady against the US Dollar (USD) on Tuesday as the markets experienced a typical end-of-year lull. Recent minutes from the Federal Open Market Committee (FOMC) meeting showed that they are leaning towards a more cautious approach, indicating they may cut interest rates in the future if inflation slows.
On Tuesday, the CAD made only minor movements against the USD. Although it appears to be overbought right now, the Canadian Dollar could see gains in 2026 as interest rates shift. The Bank of Canada has low interest rates, while the Federal Reserve is expected to lower rates. The FOMC minutes confirmed that policymakers are ready to cut rates if inflation trends warrant it.
Technical Analysis
The USD/CAD exchange rate is currently at 1.3697, which shows a bearish trend on the daily chart. The pair remains below the 50-day and 200-day exponential moving averages, with the Relative Strength Index (RSI) around 32, indicating weak momentum. Even with the possibility of short-term recoveries, strong sell signals will persist unless the moving averages are crossed. Key factors influencing the CAD include the Bank of Canada’s interest rates, oil prices, economic performance, inflation, and trade balance. Important economic data, like GDP and employment rates, directly affect the CAD. A strong economy can boost the currency by attracting foreign investment and encouraging potential interest rate hikes. As the markets quiet down for the final week of 2025, we see the Canadian Dollar as overbought, which might lead to a temporary decline against the US Dollar. Data from the Commodity Futures Trading Commission (CFTC) in mid-December showed that net long positions on the Canadian dollar were at their highest since early 2024. This suggests that positions are crowded and could see a short-term reversal as traders adjust.Central Bank Policies
The key driver for early 2026 will be the difference in central bank policies, with the U.S. Federal Reserve expected to cut rates further. The latest U.S. Core PCE Price Index for November 2025 was 2.8%, which supports the Fed’s cautious approach and opens the door for rate cuts. Meanwhile, Canada’s inflation rate for November remained higher at 3.2%, leaving little incentive for the Bank of Canada to follow the Fed’s lead. This situation suggests that traders should consider using options to manage the short-term risks of a potential USD/CAD bounce while also positioning for longer-term strength in the CAD. A trader might look into buying short-dated call options on USD/CAD to benefit from a possible rise towards the 50-day moving average. A similar situation occurred in late 2021 when year-end market conditions briefly pushed USD/CAD up before the downward trend continued in the new year. We should also keep an eye on oil prices, which have been supporting the Loonie’s value. WTI crude prices have remained steady around $85 per barrel over the last quarter, and any increase would strengthen the case for a stronger CAD. This stable commodity backdrop suggests that any short-term weakness in the Canadian dollar could represent a good buying opportunity for the future. Create your live VT Markets account and start trading now.Minutes reveal FOMC officials are ready to approve further rate cuts this afternoon
The Federal Open Market Committee (FOMC) Minutes from December show they are ready to cut rates more if inflation drops. Economic growth is expected to pick up slightly compared to October. As the market reacts to these minutes, the US Dollar Index (DXY) increased by 0.2%, reaching 98.20.
On Tuesday, the US Dollar gained strength against major currencies, closing higher against the British Pound. Gold bounced back some, trading above $4,350 after falling to $4,300 earlier in the week. The EUR/USD pair traded near 1.1750 amid calm year-end market conditions.
Currency Pairs Performance
The GBP/USD pair settled around 1.3470, recovering from a recent high above 1.3530. The USD/JPY remained strong near 156.40 after the FOMC Minutes were released. Trading for AUD/USD and USD/CAD pairs stayed mostly the same. With the New Year holidays approaching, many financial markets will close, likely leading to less trading activity. During these times, gold remains a good hedge against inflation and a safe asset. As the Federal Reserve hints at further rate cuts, we can expect a weaker US Dollar trend as we enter January 2026. This dovish approach is a key signal for market positioning in the coming weeks, especially as traders process this information during low holiday liquidity. This outlook is backed by inflation data that has decreased significantly over the last couple of years. We see a clear drop from over 9% in mid-2022. Recent data shows that the Consumer Price Index (CPI) continues to decline, giving officials space to consider easing.Opportunities in Gold and Currency Markets
For the US Dollar Index (DXY) at around 98.20, this presents an opportunity for a potential decrease. We should think about buying put options on the dollar or call options on major pairs like EUR/USD. This strategy could yield profit if the dollar weakens once full trading volume resumes after the New Year. The upcoming rate cuts are very supportive for gold. The recent drop from its all-time high of $4,550 seems to be just holiday profit-taking, creating a possible entry point. This positive outlook is strengthened by significant and ongoing purchases from central banks, which, according to the World Gold Council, added a record 1,136 tonnes to reserves in one year back in 2022. As gold typically moves opposite to interest rates, we should see the current level above $4,350 as a strong support point. Establishing long positions through call options or futures contracts on XAU/USD offers a direct way to capitalize on this expectation. These instruments will benefit if falling rates and a weaker dollar push precious metals higher in early 2026. We should also brace for increased volatility in early January. The low holiday trading may hide underlying market pressures, and as traders return, they will respond to the Fed minutes with new positions. Buying options that profit from price swings, like straddles on major currency pairs, could be a smart way to play the expected market shift. However, we need to keep an eye on employment data as a possible counterforce. The job market has been unexpectedly strong, reminiscent of the low unemployment rates around 3.7% seen in late 2023. A surprisingly strong jobs report in the coming weeks could lead the Fed to delay its first rate cut, temporarily strengthening the dollar. When it comes to currency pairs, the GBP/USD pair, which is settling below its recent high near 1.3530, is worth monitoring. A clear breakout above this level, driven by a weaker dollar, could suggest further gains. We can use options to position ourselves for this potential breakout without needing to invest a lot of capital upfront. Create your live VT Markets account and start trading now.Dow Jones drops nearly 100 points amid weak trading volumes and sector weaknesses
The Dow Jones Industrial Average dropped about 100 points due to low trading volumes related to the holiday season. While energy stocks saw slight gains, healthcare and financial services experienced declines.
Boeing’s shares rose by 1.75% after securing a government contract for F-15 jets, and UnitedHealth Group climbed 0.75%. However, Goldman Sachs fell by 1.2%, and Amgen dropped by 1%.
Federal Reserve Meeting Insights
The Federal Reserve’s latest Meeting Minutes indicated the possibility of further rate cuts, but any decisions will depend on inflation data. This shows that some FOMC members are open to lowering interest rates. US President Donald Trump has criticized outgoing Fed Chair Jerome Powell for not reducing rates more quickly. Trump appointed Powell during his first term and has expressed ongoing frustrations. The Dow Jones Industrial Average (DJIA) includes 30 major US stocks and is price-weighted. Its movement is influenced by company earnings, global economic data, and interest rates, with Dow Theory used for trend analysis. Investors can engage with the DJIA through ETFs, futures, and options contracts. With very low trading activity during the holidays, price movements may become unpredictable in the coming weeks. Trading volume is nearly 40% below the 90-day average, meaning large orders could significantly impact the market. This low liquidity suggests that new positions should be approached with caution until trading returns to normal in January.Market Conditions and Future Outlook
The Federal Reserve is hinting at rate cuts for 2026, but these changes depend on a further drop in inflation. The latest Core PCE data for November 2025 was 2.8%, still above the desired 2% target. This uncertainty means any optimistic expectations for the market could be limited. Due to this uncertainty, the VIX index has risen to 15.5, indicating a slight increase in demand for portfolio insurance. The CBOE put/call ratio has also increased, showing that traders are buying more puts to guard against potential market dips in the new year. This cautious stance in the options market reflects underlying anxiety. Political pressures on the Federal Reserve add another layer of unpredictability for early 2026. President Trump’s renewed criticism of Fed Chair Powell could create volatility if the market feels the Fed’s independence is at risk. Traders should monitor this situation closely, as it could lead to sudden shifts in the market. The anticipated “Santa Claus Rally” typically seen in the last week of the year has not occurred strongly. This sluggish, low-volume holiday period resembles the scenario at the end of 2024. The market appears to be waiting for a new catalyst in the new year before making significant moves. Create your live VT Markets account and start trading now.The EUR/USD pair gradually declined to the 1.1750 level after several days of losses.
The EUR/USD pair has continued to decline, reaching around 1.1750 on Tuesday, marking a 0.2% drop. The holiday season has brought about low trading volumes and reduced global market activity, which limits movement in the market. With the markets closing on Thursday for New Year’s, trading will likely remain quiet for the rest of the week.
Recent minutes from the Federal Reserve show a cautious approach, with most policymakers supportive of further rate cuts if U.S. inflation numbers decrease. However, there are concerns about the reliability of U.S. inflation data due to missing elements and assumptions in the Consumer Price Index (CPI). This uncertainty impacts both Federal Open Market Committee (FOMC) votes and traders’ expectations.
Technical Analysis And Market Trends
Currently, the EUR/USD is trading at 1.1752, showing a bullish trend above the 50-EMA at 1.1675 and the 200-EMA at 1.1393. The 50-EMA supports this trend, with the Relative Strength Index (RSI) at 60.22 signaling a bullish outlook. Momentum is slightly decreasing, as shown by a Stochastic reading of 77.61. If the price falls below 1.1675, a more significant pullback may occur, but staying above this level supports positive momentum. As the EUR/USD slowly decreases, low trading volumes are evident during this time of year. The thin liquidity suggests it might be wise to reduce position sizes to avoid being affected by sudden price changes. The market seems to be holding steady until full trading activity resumes in January. The Federal Reserve is considering rate cuts but remains cautious, waiting for more reliable inflation data. The latest core Personal Consumption Expenditures (PCE) report for November 2025 indicated a drop to 2.8%, continuing the downward trend from the peaks seen in 2022 and 2023. However, data collection issues are causing both the Fed and traders to hesitate in making decisive moves. On the other hand, the European Central Bank plans to keep its main interest rate at 3.0% as we enter the new year. In their December 2025 meeting, officials suggested a wait-and-see strategy, placing them on a different path compared to the Fed. This differing approach, with the U.S. leaning toward rate cuts while Europe stays steady, could provide support for the Euro in the upcoming months.Market Strategies And Future Outlook
With the slow price movements and strong support around the 1.1675 mark, selling out-of-the-money puts with short-term expirations can be a good strategy. This approach allows for premium collection during this quiet holiday period and bets that the currency pair will not drop significantly before trading activity normalizes. Looking ahead to the first quarter of 2026, the ongoing uncertainty about the quality of U.S. economic data suggests that volatility may return. This scenario makes buying longer-dated options, such as straddles, an interesting opportunity for potential price movements in either direction. The current calm in the market might provide a chance to invest in future volatility at a fair price. Create your live VT Markets account and start trading now.FOMC minutes reveal that most officials favor more rate cuts if inflation decreases
The Federal Open Market Committee (FOMC) announced that most officials would support more rate cuts if inflation continues to decline. Economic growth is expected to pick up slightly faster than what was predicted in the October meeting.
Concerns About Inflation
Some committee members felt that cutting rates is a tricky decision, while others wanted to keep rates steady. They discussed how to keep reserve balances and buy Treasury securities to handle reserves efficiently. There are worries about persistently high inflation. Some members fear that cutting rates might signal a weakened commitment to the 2% inflation goal. The committee agreed on the importance of clarifying that any Treasury purchases are solely for controlling rates. The US Dollar Index (DXY) rose to 98.20, although it remains close to its multi-month low of 97.91. The dollar showed strength, particularly against the British Pound. The exchange rates of major currencies against the US Dollar reflect the market’s response to the FOMC minutes. For example, the dollar gained 0.30% against the GBP and increased by 0.18% against the EUR.Market Implications
The latest FOMC minutes indicate a strong possibility of more rate cuts, but the disagreement among officials creates uncertainty. This situation is ideal for options strategies, as the ongoing debate over future cuts will likely lead to short-term price swings. We should consider buying straddles or strangles on major currency pairs to profit from these movements, no matter the direction. It’s essential to remember the high inflation seen in the early 2020s, which makes some officials cautious. Recent data shows that headline CPI inflation has significantly decreased, now around 2.5% year-over-year, down from the highs of 2022. This improvement encourages the more dovish members to ease policy, but the risk of persistent inflation means we should prepare for a possible shift back to a hawkish stance. The US Dollar’s reaction indicates that the market is uncertain, with the DXY climbing to 98.20 but still near long-term lows. Earlier in 2023 and 2024, the index was above 102, showing a clear downward trend. Any temporary dollar strength due to hawkish comments should be viewed as a chance to buy puts on the dollar or calls on pairs like EUR/USD, in anticipation of ongoing easing. For traders dealing in interest rate derivatives, the direction is clearer, but timing is uncertain. The market has factored in several rate cuts for 2026, but these minutes raise questions about the pace. We should watch Secured Overnight Financing Rate (SOFR) futures to take advantage of any quicker-than-expected easing if upcoming economic data—particularly regarding employment—shows weakness. This policy uncertainty is also affecting equity markets, with the Dow Jones showing signs of weakness. While rate cuts usually boost stocks, the current market is concerned about the reasons behind the cuts, mainly a slowing economy. We can use VIX options to shield portfolios since the CBOE Volatility Index could spike if the Fed indicates a need for a more aggressive cutting cycle to prevent a significant downturn. Create your live VT Markets account and start trading now.The US oil rig count increased to 412, slightly above the previous count of 409.
The latest Baker Hughes US Oil Rig Count is now at 412, up from 409 rigs before. This small increase points to a slight rise in oil drilling activity across the United States.
The global market is shaped by several economic factors, like the US Federal Open Market Committee’s plans for interest rate cuts. This potential for further reductions, combined with the holiday season, has reduced volatility in the market.
Gold And Ethereum Price Update
Gold prices remain steady above $4,350, showing little change despite new economic reports. Meanwhile, Ethereum’s price is stable above $2,900, even with increased selling pressure, highlighted by a 400K ETH deposit surplus. Looking ahead, the economic outlook for 2026 looks bright, with continued growth expected in advanced economies. The cryptocurrency market remains unpredictable, affected by regulatory changes, Digital Asset Treasuries, and trends in tokenization. FXStreet offers this information for educational purposes and does not recommend specific investments. All investments carry risks, and it’s up to investors to do their own research and make informed choices. FXStreet and its authors are not responsible for any errors or missing information. The rise in the Baker Hughes oil rig count to 412 may indicate a gradual increase in future U.S. oil production. Recent EIA data shows that U.S. crude output has consistently stayed above 13.4 million barrels per day in the last quarter of 2025. Since OPEC+ is maintaining current production levels, any signs of weaker global demand in early 2026 could lead to oversupply, making puts on WTI crude futures an appealing safeguard.Market Reaction To FOMC Rate Cuts
The FOMC is clearly signaling that more rate cuts are likely, which should weaken the dollar, at least on paper. However, major pairs like EUR/USD and GBP/USD have shown little response in this quiet holiday market, creating an opportunity. Selling short-dated options strangles on these pairs could help collect premiums as we expect this sideways trend to continue into the new year. Gold’s stability above $4,350 results from the Fed’s accommodating stance and ongoing central bank buying throughout 2025, which the World Gold Council reported exceeded 1,000 metric tons for the year. While there is strong support, this high price makes it susceptible to a quick drop if the economic outlook for 2026 turns out to be more robust than anticipated. We should think about purchasing some affordable out-of-the-money puts to guard against a sudden downturn when market activity picks up. The current calm in the market, with the VIX index recently falling below 14, is typical for this year-end holiday season. This low-volatility setting makes it cheaper to buy options that could benefit from future price changes. Investing in long-dated calls on volatility indexes might be a wise move, as we expect significant market movements to return in mid-January. Create your live VT Markets account and start trading now.NZD/USD remains near 0.5800 amid Taiwan tensions and uncertainty over Fed policy
NZD/USD is around 0.5800, showing no clear direction. This uncertainty is due to tensions in Taiwan and caution from the Federal Reserve’s FOMC Minutes. Military dynamics in Asia and differing expectations for US interest rates add to the unpredictability.
China’s extensive military drills near Taiwan, triggered by a US-Taiwan military package, have raised fears in the region. As a result, investors are less inclined to take risks, affecting the New Zealand Dollar (NZD).
Current Monetary Policy Observations
The Federal Reserve recently cut rates to a range of 3.50%-3.75%. Future decisions will rely on economic data, with projections suggesting a target rate of 3.4% by 2026. This contrasts with market expectations for more rate cuts. The Reserve Bank of New Zealand has lowered its rate to 2.25% and will also depend on data for future actions. This cautious approach isn’t enough to really bolster the NZD against the uncertain US Dollar. As year-end holidays approach and trading volumes decrease, NZD/USD stays close to 0.5800. Market players are taking a wait-and-see approach due to geopolitical tensions and monetary policy uncertainties. Today, the New Zealand Dollar saw gains against the British Pound. The heat map indicates percentage shifts in major currencies, showing the NZD strengthening against several others.Volatility And Trading Strategies
With NZD/USD stagnant around 0.5800, the market indicates significant tension, presenting an opportunity for volatility plays. Low holiday trading volumes can amplify price movements, making options strategies like straddles or strangles appealing for potential breakouts in early January. Current 1-month implied volatility for the pair is up to 10.5%, reflecting market unease. Chinese military drills near Taiwan limit the NZD’s upside potential. Satellite images confirm increased naval activity in the area, keeping investors away from risk-sensitive currencies. For traders, buying protective put options on the NZD/USD is a smart way to protect against sudden escalations in the coming weeks. On the other hand, uncertainty about the US Federal Reserve creates its own set of risks. While the Fed forecasts a slow pace of rate cuts, futures markets show a 65% likelihood of a cut by March 2026. The upcoming FOMC minutes could lead to significant changes in valuations, making the US Dollar unpredictable. This situation is similar to the market’s reaction during the Taiwan Strait crisis in 2022, which caused a rush to safe-haven assets and pushed riskier currencies down. This historical context supports a cautious, or even bearish, position on the NZD. Using put spreads could be a cost-effective way to prepare for a decline below the crucial 0.5800 level. Additionally, the Kiwi dollar faces domestic challenges that limit its appeal. The latest Global Dairy Trade auction showed a 1.2% drop in whole milk powder prices, a vital New Zealand export, continuing a weak trend from the fourth quarter of 2025. This reinforces the belief that any strength in the NZD is likely to be brief. Create your live VT Markets account and start trading now.Telus Corporation faces challenges at $12.99 as it struggles with resistance levels
Telus Corporation (TU) is experiencing a long decline, with shares now priced at $12.99, down 0.70% today. The stock’s downward trend started in late 2022 and continues to encounter various resistance levels. The trendline, which began at the peak of $22 in November 2022, has continuously rejected attempts to rally over the past two years.
Currently, there is a horizontal resistance level at $13.62. Despite several attempts to break through this point in late 2024, the stock has consistently retreated. The latest attempt on December 19 showed promise but was blocked by sellers, highlighting the difficulty of overcoming this resistance.
TU’s challenges are intensified by its dual resistance structure. To move past the $13.62 level and the descending trendline, the stock needs strong buying pressure and a fundamental market shift that hasn’t happened yet. If the price dips below $12.50, it could quickly fall towards $12.00 or $11.50.
For the stock to gain upward momentum, bulls need it to convincingly exceed $13.62 with significant trading volume. Only then can they aim for the tough descending trendline. Until a breakthrough occurs, TU’s stock is likely to remain within its current range.
As of December 30, 2025, Telus is trading at $12.99, showing a clear bearish setup due to ongoing technical weakness. The broader economic landscape supports this outlook, as the Bank of Canada has maintained interest rates above 4.5% for most of 2025. This high rate environment puts substantial pressure on capital-intensive companies like Telus, making it hard for these stocks to attract investment.
Those who believe the downtrend will continue might consider buying puts as a straightforward strategy. Given the strong resistance at $13.62 and the potential support level at $12.50, February or March 2026 puts with strikes of $12.00 or lower would be advisable. This allows time for the trade to unfold if technical support fails early in the new year.
This bearish view is supported by recent fundamental data. The Q3 2025 earnings report from November revealed that subscriber growth hit its lowest point since 2019, with competitors like Freedom Mobile aggressively capturing market share. Data from the Canadian Radio-television and Telecommunications Commission (CRTC) at the end of 2025 showed that major providers lost nearly 1% market share over the past year.
Another strategy is to sell the resistance using credit spreads. We could look into selling a January 2026 bear call spread, which involves selling $13.50 or $14.00 strike calls while buying a higher strike for safety. This trade takes advantage of time decay and the stock’s struggle to break through the established $13.62 resistance.
The source material indicates that the stock is likely to “chop,” suggesting that premium-selling strategies could work well. If implied volatility remains high due to the recent decline, an iron condor with short strikes around $12.00 and $14.00 could benefit from this range-bound movement. This strategy bets that Telus will stay between its key support and resistance levels until the January 2026 expiration.
We also need to consider the dividend, which now yields over 7%, a level not seen since the 2008 financial crisis. While this high yield might seem attractive, it often signals concerns about future cash flow and the sustainability of dividends—especially since the rate hikes that began in 2022 led to this extended decline.
For any speculative bulls, the strategy hinges on a clear breakout with high volume above $13.62. A cost-effective way to position for this unlikely scenario would be to buy far out-of-the-money calls, like the March 2026 $15 strike calls. This is a low-probability trade, treating a small investment like a lottery ticket for a sudden market shift.
Abercrombie & Fitch hits bull flag target, attracting dip buyers with momentum trading
Abercrombie & Fitch (ANF) has seen an impressive increase, with its stock price rising more than 100% since November 24. This climb mainly consisted of just six small dips.
On Monday, the stock hit the bull flag target of $130.33, a level predicted by a pattern developed in early December. After this jump, the stock seems overextended, suggesting it might either pull back or stabilize before reaching the next resistance at $143.54.
Profit-taking could create minor support around $122.72, with stronger support at $117.03. A critical point to watch is the older declining trendline near $110.00. Staying above this level is essential to keep the current momentum against short-term selling pressure.
The stock’s incredible 100% gain since late November 2025 reflects strong fundamentals and overall market confidence. This strength is backed by the company’s impressive Q3 2025 earnings report, showing a 15% increase in comparable sales. Now that the stock has reached the $130 target, we need to be careful as the rally appears to be stretched.
With the stock looking overextended, one strategy is to buy put options for late January or February 2026, targeting strike prices close to the $120 or $115 support levels. The VIX has been low around 13, making options relatively cheap for a bet on a short-term decline. A safer approach could be selling a bear call spread above the recent highs, which would profit if the stock simply stalls or drops from here.
For those who think the strong trend might continue, we should keep an eye on potential dips to support at $117.03 or the crucial trendline near $110.00. These levels offer a chance to sell bull put spreads, allowing us to collect a premium while anticipating that these key levels will hold into the new year. This strategy helps us manage risk while waiting for the stock to stabilize and prepare for its next upward move.
In the past, we’ve seen similar sharp rises in stocks, particularly tech stocks in 2023, often followed by a period of consolidation or a 15-20% drop. How ANF’s price reacts at the $117 and $110 levels will be crucial for deciding our next steps. These support zones will determine whether we see a simple profit-taking dip or a more significant trend reversal.
