Continuing jobless claims in the United States decreased from 1.923 million to 1.866 million as of 19 December. This reduction indicates potential improvements in the US labour market as the year progresses.
Currency fluctuations reflect a varying financial landscape. The Pound Sterling weakened against the US Dollar, testing support levels around 1.3450, while the EUR/USD saw recovery towards the 1.1750 region during end-of-year trading.
Commodities And Cryptocurrencies
Commodities and cryptocurrencies showed mixed performances. Gold trades near $4,300, maintaining its December gains streak, despite some profit-taking, while Bitcoin, Ethereum, and Ripple hold steady with potential for further gains.
The economic outlook for advanced countries in 2026-2027 suggests a year of solid performance building on resilience in 2025. Potential growth factors include ongoing supportive conditions and regulatory changes in the crypto market.
The crypto market experienced volatility in 2025, influenced by regulatory changes, the emergence of Digital Asset Treasuries, and increased adoption of AI and tokenization of Real-World-Assets. The market outlook for 2026 remains optimistic amid ongoing developments.
The drop in continuing jobless claims to 1.866 million is a strong signal for the US economy as we close out 2025. This figure is near the lowest levels we have seen all year, suggesting labor market tightness that could keep the Federal Reserve from cutting rates as quickly as the market expects. We believe this creates an opportunity to position for dollar strength against currencies like the Euro and Pound in the first quarter of 2026.
Anticipation Of Volatility
With holiday trading volumes being so thin, volatility has been understandably muted, as seen with the VIX index hovering just above 12. However, we anticipate a sharp return of volatility in January as institutional traders return and reposition their portfolios for the new year. Buying VIX call options or at-the-money straddles on major indices could be a cost-effective way to prepare for this shift.
The US Dollar Index’s dip below 98.30 seems like a temporary head-fake caused by year-end profit-taking. Given the strong jobs data, we see this as a chance to buy short-dated call options on the dollar index. Fed funds futures are currently pricing in a nearly 70% chance of a rate cut by the end of March 2026, a view that we feel is overly optimistic and will need to be repriced.
Gold’s pullback to the $4,300 area should be viewed as a buying opportunity, not a trend reversal. The metal is on track for its fifth straight monthly gain, supported by relentless central bank purchases which, according to the latest data from 2024, saw them accumulate a record 1,037 tonnes. We can use bull call spreads to gain long exposure while capping our upfront cost.
The optimistic outlook for 2026, combined with the positive catalysts we saw for crypto in 2025 like new ETF approvals, suggests a risk-on mood could return soon. Bitcoin has been building a base, and we are looking for a potential rebound in early January. Near-term call options on Bitcoin or Ethereum could capture a quick upward move as new capital is deployed for the year.
