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On 4 December, while analysing the XNG/USD chart, we highlighted the rally in natural gas prices towards a three-year high and noted that the price had entered a resistance zone formed by:

→ the upper boundary of a broad descending channel (shown in red);

→ the $4.800/MMBtu level, near which a peak was formed in March;

→ the psychological $5.000/MMBtu mark.

As indicated by the arrow:

→ this resistance cluster proved effective, and after an attempt to break above the $5.000 psychological level, the uptrend reached its climax;

→ following the appearance of a bearish gap on 8 December, selling pressure took control, leading to a break below the orange ascending trend line and a decline in US natural gas prices.

From a fundamental perspective, the pullback has been driven by several factors:

→ Seasonality. Weather forecasts for the US holiday period point to above-average temperatures, reducing demand for heating and power generation.

→ Rising production. According to Trading Economics, natural gas output in the continental United States reached 109.7 billion cubic feet per day in December, maintaining the record levels seen in November. In addition, EIA data show that gas inventories remain 0.9% above the current five-year average.

It is worth noting that today natural gas prices are trading:

→ near a support zone created by the bullish gap formed in the second half of October;

→ close to the median of the aforementioned descending channel, an area where supply and demand often come back into balance.

Taking this into account, it is reasonable to assume that:

→ after a sharp drop of around 30% from the early-December peak, sellers may look to lock in profits ahead of the holidays;

→ the market could enter a consolidation phase.

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Market Picture

The crypto market set another trap for bulls yesterday afternoon, jumping to $3T and then falling to $2.85T. However, on Friday morning, it is once again flirting with buyers, trading at the same level of $2.95T, where it has remained since the beginning of the week.

On Thursday, Bitcoin replayed Wednesday’s micro-drama, soaring towards $90K, only to soon fall below its previous local lows. As a result, by the end of the day, the intraday low had fallen back to $84K, which we last saw almost five weeks ago. However, on Friday morning, the price is back at the $87K level, around which it has been trading for the last four days.

Although Bitcoin has buyers stopping really sharp declines, other top altcoins are gradually drifting down. It appears that large holders have been quietly exiting them over the last three to five months. This is clearly visible in Ethereum, XRP, and Solana. Zcash, in its traditional manner, soars sharply on signs of a reversal in larger coins, but then falls just as dramatically.

News background

The options market is hedging against the risk of Bitcoin falling below $85K, according to Derive.xyz. Market participants anticipate an increase in volatility at the end of the year. The situation is exacerbated by unstable inflows into ETFs and a decline in liquidity ahead of the holidays.

BTC’s growth is also being hindered by investor doubts about the return on investment in the American artificial intelligence (AI) sector, amid a liquidity shortage. Bitcoin’s correlation with the Nasdaq has strengthened due to the influx of large investors.

BitcoinForCorporations predicts an outflow of up to $15 billion from DAT companies accumulating cryptocurrency if MSCI decides to exclude them from its indices. Eighteen firms are at risk of exclusion.

In 2025, Bitcoin’s volatility was lower than that of Nvidia’s shares, according to Bitwise. The emergence of spot ETFs and other traditional instruments caused the ‘fundamental reduction in risk’ of the asset.

An increase in the number of users and an expansion of the gas limit has led to the ‘inflation’ of the Ethereum blockchain, which negatively affects the operation of nodes, warned the Ethereum Foundation (EF) team, proposing several possible solutions. Ethereum co-founder Vitalik Buterin called for Ethereum to be simplified. In his opinion, the complexity of using the ecosystem of the second-largest cryptocurrency by capitalisation hinders its mass adoption.

Retail sales declined for a second consecutive month in October, slipping 0.2% month-on-month (m/m), undershooting Statistics Canada's advanced estimate for a flat reading. After adjusting for inflation, sales volumes fell a steeper 0.6% m/m.

Auto sales partially reversed September's losses, rising 0.6% m/m in October.

Receipts at gas stations and fuel vendors fell 0.8% m/m, driven by weaker demand, with volumes also down 0.9% m/m.

Core sales – excluding auto sales and receipts at gas stations – were weak for a second straight month, declining 0.5% m/m.

• Weakness was concentrated in food and beverage stores (-2.0% m/m) with more than a 10.6% drop at beer, wine and liquor retailers coinciding with a labour dispute in British Columbia. Sales at clothing and clothing accessories (-0.7% m/m) and health and personal care stores (-0.3% m/m) also fell in October.
• Gains at furniture, home furnishings stores (+2.3% m/m) partially offset the weakness.

E-commerce sales declined by 0.3% m/m in October.

Statistics Canada's advanced estimate points to a rebound with 1.2% gain in November.

Key Implications

The holiday shopping season got off to a flat start. Despite November's rebound, the underlying trend in real sales remains negative. Only a handful of discretionary categories – clothing and electronics – continue to show positive momentum. This lines up with our TD credit & debit card data, which show relatively resilient services spending growth outpacing goods

Looking ahead, our outlook for Q4 real consumption growth remains subdued, tracking close to 1.0% (quarter-on-quarter, annualized). This below-trend pace is consistent with the Bank of Canada’s assessment that the economy is still working to gain traction and that monetary policy is appropriately positioned.

Yen selling remains the dominant theme heading into the weekend, with the currency staying as the weakest performer. The renewed slide comes despite the BOJ lifting interest rates to their highest level since 1999. The problem for Yen bulls is not the direction of policy, but the pace. BoJ normalization is widely expected to remain slow and cautious, with policymakers clearly unwilling to risk choking off fragile momentum in growth and wages.

Market consensus has now converged on the view that the next BoJ hike is unlikely to arrive until mid-2026. Even then, policy rates would only move toward the lower bound of the estimated neutral range, roughly between 1.00% and 2.50%. Some investors are already questioning whether the cycle will go any further. There is growing speculation that 1.00% could ultimately mark the terminal rate of the current tightening phase, limiting the scope for sustained Yen appreciation.

While there is theoretical room for rates to move deeper into neutral, that would require tangible evidence of stronger domestic demand. In particular, markets will look for results from Prime Minister Sanae Takaichi’s fiscal stimulus efforts, alongside clear proof that wage growth can be sustained into 2026.

Elsewhere, Dollar trading has steadied after New York Fed President John Williams reinforced skepticism around November’s CPI data. His remarks that the report was likely distorted validated market hesitation to push Dollar lower earlier in the week. As a highly influential Fed voice, Williams’ comments were taken seriously and helped anchor expectations that policy repricing will remain limited in the near term, probably until the December NFP data after holidays.

For the week so far, Kiwi sits at the bottom of the FX performance table, followed by Yen and Aussie. Swiss Franc leads, ahead of Sterling and Dollar, while Euro and Loonie remain positioned in the middle as markets.

In Europe, at the time of writing, FTSE is up 0.15%. DAX is up 0.19%. CAC is down -0.06%. UK 10-year yield is up 0.041 at 4.531. Germany 10-year yield is up 0.044 at 2.897. Earlier in Asia, Nikkei rose 1.03%. Hong Kong HSI rose 0.75%. China Shanghai SSE rose 0.36%. Singapore Strait Times fell -0.02%. Japan 10-year JGB yield rose 0.057 to 2.024.

Fed’s Williams flags CPI distortions, plays down urgency to cut again

New York Fed President John Williams said today that November’s inflation data were likely distorted by "technical factors", cautioning against overinterpreting the downside surprise. He estimated that such distortions may have pushed the CPI reading down by around a tenth of a percentage point.

Williams said it remains difficult to fully assess the size of the impact until December data become available, which should provide a clearer picture of how much the technical effects influenced November’s figures.

On policy, Williams struck a measured tone, saying he does not feel a "sense of urgency" to lower interest rates further. He argued that the cuts already delivered have positioned the Fed well to continue easing inflation pressures while also supporting a labor market that is cooling in an orderly fashion.

Canada retail sales fall -0.2% mom in October, November rebound eyed

Canada’s retail sales edged down by -0.2% mom to CAD 69.4B in October, extending signs of soft consumer demand. Sales declined in four of nine subsectors, led by weakness at food and beverage retailers, pointing to ongoing pressure on discretionary spending.

Underlying momentum was weaker than the headline suggested. Core retail sales, excluding autos and gasoline, fell -0.5% mom. Sales volumes declined -0.6% mom.

Statistics Canada’s advance estimate points to a 1.2% mom rebound in November. While the estimate is based on a lower-than-usual response rate of 60%, it hints at a potential stabilization in consumption as financial conditions ease, though confirmation will depend on the final data.

BoJ raises rates to 0.75%, keeps tightening bias intact

The BoJ raised its policy rate by 25bps to 0.75%, as widely expected, marking another step in its gradual normalization process. Despite the hike, the BoJ emphasized that financial conditions remain highly accommodative, with real interest rates still “significantly negative.”

In its statement, the BoJ reaffirmed a tightening bias. If the outlook laid out in the October 2025 Outlook Report is realized, the Bank said it will "continue to raise the policy interest rate". Policymakers also expressed increased confidence that the likelihood of realizing the outlook "has been rising".

At the post-meeting press conference, Governor Kazuo Ueda stressed future adjustments will depend on incoming data on economic, price, and financial conditions, with policy decisions reassessed at every meeting rather than following a preset path.

On the neutral rate, Ueda acknowledged substantial uncertainty. He described the estimate as sitting within a wide range and said they would assess how the economy and prices respond to each rate move. "We will seek to produce new estimates on Japan's neutral rate, if needed, though I don't think that will help us narrow the range that much," he added.

NZ trade deficit narrows to ND -163m on 9.2% yoy exports surge

New Zealand’s trade balance surprised to the upside in November, with the deficit narrowing sharply to NZD -163m, far smaller than expectations for a shortfall of around NZD -1.2B. The improvement was driven by a solid pickup in exports, which rose 9.2% yoy, or NZD 588m, to NZD 7.0B.

Export performance was mixed by destination. Shipments to Australia surged by 31% yoy, while exports to the EU also rose strongly by 51% yoy. By contrast, exports to China slipped modestly by -0.7%yoy, while shipments to the US fell sharply by -17% yoy, and Japan by -1.9% yoy.

Imports rose at a more moderate pace of 4.4% yoy to NZD 7.2B. Gains were led by stronger inflows from the US (36% yoy), EU (17% yoy) and South Korea (20% yoy). Imports from China rose a modest 1.7% yoy. Imports from Australia declined (-7.7% yoy).

NZ ANZ business confidence hits 30-year high as cyclical recovery gathers pace

New Zealand business confidence surged in December, with the ANZ headline index jumping from 67.1 to 73.6. Firms’ own activity outlook rose sharply from 53.1 to 60.9. Both readings are the strongest in 30 years, pointing to a broad-based improvement in sentiment as the economic cycle turns.

Inflation indicators ticked up modestly but remain contained. The share of firms expecting to raise prices in the next three months rose one point to 52%, while those anticipating cost increases climbed two points to 76%. Inflation expectations, however, were unchanged at 2.69%, suggesting confidence is improving without triggering a renewed inflation scare.

ANZ said “things are clearly looking up,” noting that the earlier slowdown was deliberately engineered by tight monetary policy. With that restraint easing, interest rates and the exchange rate both well below their peaks, and the RBNZ signaling no intention to hike rates any time soon, cyclical forces appear firmly supportive of recovery.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 155.23; (P) 155.61; (R1) 155.93; More...

USD/JPY's rally continues today and the break of 156.94 solidify that case that corrective pattern from 157.88 has completed with three waves to 154.38. That is, rally form 139.87 is ready to resume. Intraday bias is back to the upside for 157.88 and above. Firm break of 158.85 key structural resistance will be an important medium term bullish sign. Next target will be 158.85 high. Risk will now stay on the upside as long as 154.38 support holds, in case of retreat.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 1.1704; (P) 1.1734; (R1) 1.1754; More….

EUR/USD is still bounded in range below 1.1803 and intraday bias stays neutral. On the upside, break of 1.1803 will resume the rally from 1.1467 to retest 1.1917 high. Decisive break there will resume larger up trend. On the downside, however, firm break of 55 D EMA (now at 1.1640) will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1373) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 1.3333; (P) 1.3390; (R1) 1.3439; More...

GBP/USD is still bounded in tight range below 1.3455 and intraday bias stays neutral. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3298) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

Daily Pivots: (S1) 0.7924; (P) 0.7945; (R1) 0.7961; More….

USD/CHF is still bounded in tight range and intraday bias remains neutral at this point. Overall, corrective pattern from 0.7828 is still extending. On the upside, break of 0.7990 support turned resistance will bring stronger rebound towards 0.8084. On the downside, below 0.7923 will target 0.7877 support.

In the bigger picture, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low). Long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.

Daily Pivots: (S1) 155.23; (P) 155.61; (R1) 155.93; More...

USD/JPY's rally continues today and the break of 156.94 solidify that case that corrective pattern from 157.88 has completed with three waves to 154.38. That is, rally form 139.87 is ready to resume. Intraday bias is back to the upside for 157.88 and above. Firm break of 158.85 key structural resistance will be an important medium term bullish sign. Next target will be 158.85 high. Risk will now stay on the upside as long as 154.38 support holds, in case of retreat.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

New York Fed President John Williams said today that November’s inflation data were likely distorted by "technical factors", cautioning against overinterpreting the downside surprise. He estimated that such distortions may have pushed the CPI reading down by around a tenth of a percentage point.

Williams said it remains difficult to fully assess the size of the impact until December data become available, which should provide a clearer picture of how much the technical effects influenced November’s figures.

On policy, Williams struck a measured tone, saying he does not feel a "sense of urgency" to lower interest rates further. He argued that the cuts already delivered have positioned the Fed well to continue easing inflation pressures while also supporting a labor market that is cooling in an orderly fashion.

Canada’s retail sales edged down by -0.2% mom to CAD 69.4B in October, extending signs of soft consumer demand. Sales declined in four of nine subsectors, led by weakness at food and beverage retailers, pointing to ongoing pressure on discretionary spending.

Underlying momentum was weaker than the headline suggested. Core retail sales, excluding autos and gasoline, fell -0.5% mom. Sales volumes declined -0.6% mom.

Statistics Canada’s advance estimate points to a 1.2% mom rebound in November. While the estimate is based on a lower-than-usual response rate of 60%, it hints at a potential stabilization in consumption as financial conditions ease, though confirmation will depend on the final data.

Full Canada retail sales release here.