🧠 Gold at records, soft dollar and post-BoJ adjustment
Published: 12/22/2025
Overall Market Sentiment
Markets start the holiday week in a cautiously risk-on mood. The US Dollar Index is holding near the lower end of its recent range after last week’s downside US inflation surprise and ongoing “easier-policy” expectations. Equities are stabilising close to record territory, while investors continue to lean toward real assets and selective risk as real yields stay constrained.
Gold remains near record levels, Brent is trading around the low 60s, and Bitcoin is holding in the upper 80k area, a mix that fits a world where policy is easier, growth is slowing but not collapsing, and hedges still matter.
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Geopolitics and macro policy mix
Oil is a useful window into this year’s macro mix. Despite persistent geopolitical tension, crude is still trading closer to the bottom half of its broader range, reinforcing the idea that supply is comfortable and that the traditional “risk premium” is less persistent than in past cycles. That keeps energy mildly disinflationary, easing pressure on central banks and slightly tempering support for petro-currencies such as CAD and NOK.
Japan remains a key FX swing factor after the BoJ’s move away from ultra-easy policy. Even with higher domestic yields, USDJPY has stayed elevated, reminding markets that the yield gap versus the US is still meaningful and that positioning can dominate in thin conditions. The key risk into year-end is that choppy yen moves spill over into broader FX volatility, especially if liquidity thins further.
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Currency outlooks
🔻 USD: Soft US data, cuts priced, dollar still on the defensive
The dollar is still trading with a soft bias. Disinflation has reasserted itself and the labour market is cooling at the margin, which keeps markets leaning toward more easing over 2026 than the Fed’s own projections.
With the holiday week light on top-tier US releases, the dollar’s near-term direction is likely to be driven by rate expectations, risk sentiment, and any Fed communication that pushes back against aggressive easing pricing. Risks still lean toward mild USD softness versus currencies with steadier policy backdrops, while a rebound in activity data or a volatility spike would be the main upside catalysts.
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🔺 EUR: Patient ECB and soft USD keep euro supported
EURUSD remains supported by the softer dollar and an ECB that is clearly in patient-hold mode, with policy rates unchanged and inflation projected close to target.
In a thin week, the euro is less about fresh Eurozone catalysts and more about whether US yields drift lower again. Broadly, the balance still favours a firm euro while the US disinflation narrative holds, with the market continuing to treat the mid-1.16s/1.17 area as support and the upper-1.17s/1.18 area as resistance.
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🔻 GBP: First BoE cut leaves sterling with a softer policy anchor
Sterling is still digesting the BoE’s first cut of this cycle and what it implies for 2026. A tighter vote underscores that the committee is not fully aligned, but the direction of travel is now toward easing rather than restraint.
That softer policy anchor tends to keep GBP rallies more vulnerable, particularly on crosses, unless the dollar weakens enough to lift all majors together.
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⚖️ CAD: Stable BoC meets modest oil support and softer USD
CAD is being pulled by a steady domestic policy story on one side and a crude market that is supportive only at the margin on the other. With oil not high enough to create an inflation problem, CAD tends to trade more like a “rates plus risk sentiment” currency than a pure commodity proxy. Net effect: broadly neutral bias unless oil or US yields make a decisive move.
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🔻 CHF: Strong franc, low inflation and a patient SNB
The franc remains expensive on most measures, and with inflation very low, the SNB’s tolerance for further sustained CHF strength looks limited. In this backdrop, CHF tends to underperform modestly when risk is calm, but it can still catch bids quickly if equities wobble or event risk spikes.
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🔺 JPY: BoJ shift, volatile positioning and intervention risk premium
The post-BoJ adjustment remains a live risk. Even if the longer-term policy shift is yen-supportive, short-term price action can be dominated by yield differentials, risk appetite, and thin liquidity. That combination increases the odds of sudden, asymmetric moves, especially if the market tests levels that amplify official discomfort.
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⚖️ AUD: Hawkish RBA, but still trading like a high-beta play
AUD continues to trade more like a high-beta expression of global risk and China sentiment than a pure domestic-rate story. The RBA’s stance helps put a floor under the currency, but the upside still depends on global conditions staying constructive and the dollar staying soft.
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🔺 NZD: “Hawkish cut” backdrop offers support, but global risk still leads
NZD remains underpinned by a relatively firmer policy floor than earlier in the year, but day-to-day direction is still mostly set by global risk tone and the dollar leg. In thin markets, that typically means choppier ranges rather than clean trends.
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Cross-asset wrap
• 🪙 Gold: Still behaving like a structural macro hedge in a “lower real yields” regime, holding near record territory.
• 🛢 Oil: Trading around the low 60s with surplus narratives limiting sustained rallies; more disinflationary than inflationary.
• 📈 Stocks: Close to record levels, supported by easier policy expectations, but more sensitive to volatility spikes in thin trading.
• ₿ Crypto: Tracking liquidity/risk appetite closely; tends to benefit from softer real yields, but remains volatile around macro shifts.
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This is general, educational market commentary on FX and macro assets. It is not investment advice and not a trading signal.