In December, the United States Housing Price Index showed a month-on-month increase of 0.4%, exceeding the forecasted 0.2%. This growth suggests a stronger-than-expected performance in the housing market.
Concerns about US tariffs have impacted the AUD/USD, which has been on the decline for three consecutive days. The pair approached the 0.6320 zone, reflecting a bearish sentiment.
Meanwhile, the EUR/USD has seen consolidation, surpassing the 1.0500 mark amid scepticism surrounding the US economy. Gold prices have dipped below $2,900, influenced by broader trends in the US dollar and yields.
In the crypto sector, Bitcoin traders faced substantial liquidations, totalling over $746 million within a day. Recent events linked to meme coins and a major hack have further destabilised the market.
The upcoming week will focus on comments from various political figures, particularly relating to Germany’s elections and statements from Trump. These developments may overshadow some economic figures, although attention will remain on the Fed’s preferred inflation metrics.
A closer look at December’s US Housing Price Index reveals some strength in the housing sector, with the increase of 0.4% doubling what was initially anticipated. A movement like this suggests that housing demand remains more resilient than expected, which can, in turn, influence inflation expectations and policymakers’ decisions moving forward. If house prices continue to rise, there is always the potential for pressure on mortgage rates and overall borrowing conditions, something that will deserve further observation in the weeks ahead.
Shifting to currency markets, the Australian dollar has been under pressure, particularly against the US dollar, as concerns about tariffs continue to weigh. The decline over three consecutive days underscores how sentiment has taken a negative turn, with 0.6320 being tested as traders evaluate whether this level will hold or if further downside movement is on the horizon. External factors tied to trade policies are adding another layer of uncertainty, which means that volatility in this pair could persist for a while yet.
For the euro, the situation has been more stable, with the common currency consolidating and even managing to climb past 1.0500. There remains uncertainty surrounding US economic momentum, which has given a slight boost to the euro in recent sessions. However, movements in EUR/USD will not be immune to developments in the United States, especially as inflation figures and central bank commentary begin to take shape. It remains to be seen how long the market maintains an attitude of caution.
Gold has struggled as markets increasingly look to the US dollar and yields for guidance. A decline beneath $2,900 reflects how strength in Treasury yields can pull capital away from non-yielding assets like gold, forcing prices lower. If the current trend continues, further tests to the downside remain possible, especially if upcoming inflation data reinforces expectations of prolonged tight monetary policy. Looking ahead, shifting risk sentiment has the potential to dictate the next direction.
Within digital assets, Bitcoin traders endured another sharp round of liquidations, with more than $746 million being wiped out within just 24 hours. The impact of this has only been worsened by recent disruptions caused by meme coin movements and security breaches, both of which have rattled those participating in digital markets. Although crashes like these are part of Bitcoin’s history, the scale of losses shows how rapidly sentiment can shift in the absence of stability. With volatility still very much in play, traders will need to assess technical levels carefully before making further commitments.
Attention in the coming days will largely centre on various political statements, particularly around Germany’s elections and Trump’s latest remarks. Political risk has the ability to divert focus away from traditional drivers like economic data, but it will not make inflation readings irrelevant. With the Federal Reserve’s preferred inflation metric still on the agenda, it would be premature to assume that market reactions will be solely dictated by political headlines. The balance between politics and economic indicators will decide where markets move from here, and staying ahead of both will be necessary.
