The Christmas holidays made for a quiet and shortened trading week, with fewer big moves in the markets. In the U.S., GDP data for Q3 was revised much higher, showing the economy grew at an annual rate of 4.3%, the fastest pace in two years. At the same time, U.S. consumer confidence fell for a fifth month in a row, as people became more worried about jobs and business conditions.
The U.S. dollar weakened during the week, which helped gold surge to new record highs as the strong uptrend continued. USD/JPY moved lower after Bank of Japan Governor Ueda signaled the central bank is ready to raise interest rates further next year. The yen was also supported by verbal warnings from Finance Minister Katayama, while the 10-year Japanese government bond yield rose to 2.04%.
Stock markets in both the U.S. and Japan moved slightly higher, but gains were limited due to low holiday trading volumes. With no major surprises, most price action reflected year-end positioning rather than strong conviction, leaving markets ready to react to new data in the weeks ahead.
Markets This Week
U.S. Stocks
The Dow Index has returned to record highs as the U.S. economy continues to grow better than expected, easing fears of a sharp slowdown. With markets winding down for the year, trading is likely to remain quiet, making range trading the preferred strategy for those who choose to stay active. Resistance is seen at 49,000 and 50,000, while support is located at 48,000, 47,500, 47,000, 46,500, and 46,000.
Japanese Stocks
The Nikkei index edged slightly higher, supported by gains in U.S. stocks and the continued weakness of the yen. Price is holding above the 50,000 level, but the sideways-sloping 10-day moving average suggests that range-bound trading is likely to continue this week. Resistance is seen at 51,000円, 51,500円, and 52,000円, while support is located at 49,000円, 48,000円, and 47,000円.
USD/JPY
USD/JPY held firm near the yearly highs after the sharp rally triggered by the Bank of Japan’s monetary policy statement the previous week. This week, Bank of Japan Governor Ueda said further interest rate hikes are likely next year, while government comments suggesting the yen remains too weak encouraged continued selling pressure. Support held near the 10-day moving average, and rising long-term Japanese bond yields point to ongoing concerns about Japan’s public finances, keeping yen sellers active. With strong resistance around 158 and no direct intervention from the Bank of Japan so far, yen weakness may persist. In the short term, range trading between 155 and 158 looks like the most suitable strategy. Resistance is at 158, 159, and 160, while support is at 156, 155, and 154.5.
Gold
The strong uptrend in gold extended last week, with prices surging to fresh record highs as traders and investors continued to buy. There was no single news event driving the move, but the ongoing weakness in the U.S. dollar provided support. In the short term, gold is overbought, with prices trading above the upper Bollinger Band, but fighting the uptrend remains risky. The preferred approach is to wait for a pullback closer to the 10-day moving average before looking for buying opportunities. Resistance is seen at $4,600, $4,700, and $4,800, while support is located at $4,450, $4,380, $4,350, and $4,300.
Crude Oil
WTI crude held the yearly lows, encouraging some short-term speculative buying, with strong U.S. GDP data also providing support. However, resistance at $60 held, and the broader trend remains downward. As long as prices stay below $60, the focus remains on selling opportunities. Resistance is seen at $60, $65, $66.50, $70, and $75, while support remains at $55 and $50.
Bitcoin
Bitcoin had a quiet week as speculative selling continued following the drop back below $100,000, which has weakened market sentiment. Price remains range-bound, but risks are skewed toward further downside if additional speculative positions are liquidated. In the short term, the focus remains on selling opportunities rather than chasing rebounds. Key levels remain unchanged, with resistance at $95,000 and $100,000, while support is at $85,000, $80,000, and $75,000.
This Week’s Focus
- Monday: U.S. Pending Home Sales
- Tuesday: U.S. S&P Case-Shiller home price index, Chicago PMI and FOMC Minutes
- Wednesday: China Manufacturing PMI
- Friday: U.S. S&P Global US Manufacturing PMI
This is a shortened trading week with even fewer economic releases than last week, as New Year holidays around the world further reduce market activity. With low liquidity, large moves are unlikely, but surprises are always possible, especially in gold and USD/JPY, which remain popular with both short-term and long-term traders.
