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A collection of good and bad news affecting the foreign exchange market
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Hello everyone, today XM Forex will bring you "[XM Official Website]: A collection of good and bad news affecting the foreign exchange market". Hope this helps you! The original content is as follows:
On Christmas Eve, December 24, 2025, the foreign exchange market was affected by the contraction of liquidity during the Christmas holiday, the divergence of central bank policy expectations, the fermentation of geo-risks and the disturbance of economic data, showing a pattern of "weakness of the US dollar and structural differentiation of non-US currencies". The following is a summary of the core news affecting major currencies from the perspective of good and bad, www.xmtraders.combined with market logic and trading tips, to provide a reference for intraday trading.
1. The U.S. dollar: Negative factors dominate, and weakness continues (index 97.95, down 0.34% on the day)
Good news
U.S. economic data exceeded expectations: U.S. third-quarter GDP annualized quarterly rate was revised up to 4.3%, consumer spending and exports are strong, reducing the probability of the Federal Reserve's radical interest rate cut in early 2026, forming short-term support for the U.S. dollar.
Fine-tuning of fiscal policy expectations: Finance Minister Bessant proposed changing the target to a range (such as 1.5%-2.5%) after inflation reaches the target, or increasing policy flexibility, which will benefit the stability of the US dollar in the long term.
Bad News
The Fed’s policy differences have intensified: officials have different opinions on the extent and pace of interest rate cuts next year, and the market is unclear about the policy outlook, weakening the appeal of the dollar.
European Central Bank's hawkish www.xmtraders.comparison: The European Central Bank kept interest rates stable and released hawkish signals, which contrasted with the Fed's easing tendency and pushed the euro to strengthen and suppress the U.S. dollar index.
Liquidity shrinks during holidays: European and American markets closed early, trading volume was light, institutions closed positions and waited, the US dollar’s safe-haven attribute was not highlighted, and funds turned to traditional safe-haven currencies such as the Japanese yen and Swiss franc.
Diversion of geopolitical risks: Black Sea conflict, Venezuelan sanctions and other risksInstead of boosting the U.S. dollar, it is beneficial to non-U.S. safe-haven currencies and exacerbates the weakness of the U.S. dollar.
2. European currencies: Positive resonance, fluctuating upwards
Euro (EUR/USD 1.1792, up 0.26%)
Positive: The European Central Bank maintains interest rates stable, officials emphasize the resilience of inflation, and the policy divergence from the Federal Reserve supports the euro; the euro zone economic data improves marginally, and industrial output rebounds month-on-month, boosting confidence in recovery.
Negative: The German business climate index has declined for two consecutive months, and the economic differentiation within the euro zone has limited the upside space for the euro.
GBP (GBP/USD 1.3498, up 0.27%)
Good news: British inflation data exceeded expectations, service sector PMI rebounded, market expectations for an interest rate cut by the Bank of England cooled, supporting the pound; trade negotiations between the UK and the EU have made progress, reducing the risk of a hard Brexit.
Negative: The British real estate market continues to be weak, high mortgage interest rates are suppressing domestic demand, and there is insufficient momentum for economic recovery.
3. www.xmtraders.commodity currency: differentiated game, range oscillation
Australian dollar (AUD/USD 0.6765, up 0.64%)
Positive: China's manufacturing PMI improved marginally, boosting expectations for Australian dollar www.xmtraders.commodity exports; the Australian central bank maintained interest rates stable, emphasized inflation risks, and policies supported the Australian dollar.
Bad news: Australia’s unemployment rate rose to 3.9%, consumer confidence declined, and concerns about slowing economic growth suppressed gains.
Canadian dollar (USD/CAD 1.3732, down 0.41%)
Positive: International oil prices rebounded (WTI US$58.38/barrel, up 0.64%), supporting the Canadian dollar’s commodity attributes; Bank of Canada officials hinted that interest rate cuts may be suspended next year, and policy support has increased.
Bad news: Canadian retail sales fell 0.3% month-on-month, and domestic demand was weak, limiting the gains of the Canadian dollar.
4. Safe-haven currencies: The Japanese yen is strong and the Swiss franc is stable
Japanese yen (USD/JPY 156.24, down 0.52%)
Positive: Japan’s Finance Minister warned about speculation in the yen, hinting at intervention, boosting the yen; expectations for the Bank of Japan’s policy normalization are fermenting, and the market is betting on an interest rate hike next year, supporting the yen.
Negative: Japan's core inflation fell back to 2.5%, and economic growth is weak, limiting the height of the yen's rebound.
Swiss franc (USD/Swiss franc 0.7879, down 0.50%)
Positive: geopolitical risks are heating up, and demand for Swiss franc hedging increases; the Swiss National Bank maintains a negative interest rate policy, intervenes in the foreign exchange market to curb excessive appreciation of the Swiss franc, and enhances stability.
Bad news: Swiss export data fell, the manufacturing PMI was below the boom-bust line, and the downward pressure on the economy increased.
5. RMB: strong appreciation, reaching a 14-month high (offshore 7.0193)
Good news
At the end of the year, corporate demand for foreign exchange settlement was concentrated, forming a seasonal "foreign exchange settlement wave", pushing upRMB exchange rate.
The People’s Bank of China maintains prudent monetary policy, the attractiveness of RMB assets has increased, and foreign capital inflows have increased.
The U.S. dollar index weakened, providing external space for RMB appreciation.
Bad news
China’s manufacturing PMI has been below the boom-bust line for two consecutive months, and the foundation for economic recovery is not yet solid.
Sino-US trade friction still exists, and export resilience is facing a test.
VI. Trading Tips and Risk Warning
Trading strategy: When the US dollar is weak, you can go long on euros, pounds and other European currencies, relying on key support levels (euro 1.1750, pound 1.3430); the yen will focus on the 156.00 support, and the US dollar will rebound against the yen to go short, with a stop loss above 157.00.
Risk warning: Insufficient liquidity during the holidays may cause abnormal fluctuations. It is recommended to reduce positions during the day and avoid holding positions for the holidays; pay attention to the US initial jobless claims data on December 27 and the minutes of the European Central Bank meeting on December 28, and be wary of sudden changes in policy expectations.
Technical reference: EURUSD has resistance of 1.1820 and support of 1.1750; GBP/USD has resistance of 1.3520 and support of 1.3430; USD/JPY has resistance of 157.00 and support of 155.80.
7. Core concerns
Evolution of geopolitical risks after the Christmas holidays (Black Sea transportation, Venezuelan sanctions).
Federal Reserve officials spoke after the holidays to clarify the policy path.
The OPEC+ meeting in January 2026 and crude oil price trends will affect the performance of www.xmtraders.commodity currencies.
China’s December PMI data and the subsequent trend of the RMB exchange rate.
Overall, the intraday foreign exchange market is based on the main line of "negative dominance of the U.S. dollar and structural strength of non-U.S. currencies." However, the holiday effect limits fluctuations. Investors are advised to operate with caution and focus on seizing short-term opportunities brought by policies and data.
The above content is all about "[XM official website]: Collection of good and bad news affecting the foreign exchange market". It is carefully www.xmtraders.compiled and edited by the XM foreign exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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