US ISM Manufacturing PMI fell short of expectations in December, recorded at 47.9 compared to the anticipated 48.3. The index saw a decline from November’s figure of 48.2, influencing currency movements and gold prices.
Gold has gained upward momentum amidst geopolitical uncertainties, notably due to the US’s actions involving the Venezuelan President. The softer data from the US has aided in strengthening gold’s position in the market.
Bitcoin And Cryptocurrency Performance
Bitcoin remains above the 50-day EMA, with demand driven by ETF inflows despite geopolitical concerns. Ethereum holds its position above $3,100, reflecting stability in the broader crypto market.
Ripple is rising, currently above $2.13, bolstered by ETF interest and derivative demands. XRP’s progress continues for the fifth day, showing sustained investor interest across the crypto market.
EUR/USD climbed back to around 1.1700 as the US Dollar lost ground following the weaker PMI data. GBP/USD also rose to approximately 1.3530, influenced by the negative impact on US currency after the PMI results were published.
The manufacturing data for December 2025 showed a contraction at 47.9, missing expectations and signaling a weakening US economy. Historically, when this index has stayed below 48 for consecutive months, it has often preceded a broader economic slowdown, prompting the Federal Reserve to consider rate cuts. Therefore, we see positioning for a weaker US Dollar through options on currency futures as a prudent move.
Geopolitical And Economic Implications
Geopolitical turmoil, highlighted by the events in Venezuela, is creating a classic flight to safety that directly benefits gold. This move is amplified by the weakening US Dollar, as gold is priced in dollars and has historically shown a strong inverse correlation. We saw a similar pattern in early 2022 during the conflict in Ukraine, where gold prices surged over 10% in just a few weeks, making long positions in gold futures or call options attractive.
The knock-on effect of a weaker dollar is clearly seen in the rally of EUR/USD and GBP/USD toward 1.1700 and 1.3530, respectively. We anticipate this trend will continue if upcoming inflation data from the Eurozone and the UK remain firm, suggesting their central banks will hold rates steady while the Fed pivots. Buying call options on the euro or pound against the dollar offers a defined-risk way to capture this potential upside.
The combination of a potential US slowdown and new geopolitical flashpoints suggests an increase in market volatility. The CBOE Volatility Index (VIX), often called the market’s “fear gauge,” typically rises in such environments; for instance, it more than doubled during the uncertainty of the first quarter of 2020. We believe purchasing VIX call options could be an effective hedge against a broader market downturn.
Cryptocurrencies are notably ignoring the wider market’s risk-off mood, fueled instead by strong spot ETF inflows. Looking back, we saw over $50 billion flow into these products globally through 2024 and 2025, creating a strong and consistent bid for the underlying assets. This suggests the current bullish trend has its own momentum, making call options on Bitcoin and Ethereum a way to participate in a market that is following its own narrative.
