The EUR fell 0.53% against the USD during the week, driven by mixed Eurozone data and strong US jobs reports.

In the Eurozone, the German manufacturing PMI unexpectedly dropped in December, signaling continued contraction in the manufacturing sector, though the services sector showed signs of improvement. Germany’s Ifo business climate index also fell, while the ZEW Economic Sentiment Index rebounded. Eurozone inflation rose for the second consecutive month, raising concerns about the need for tighter policies. The ECB indicated that rates may remain elevated for an extended period due to persistent inflation risks, adding to market uncertainty. German consumer confidence showed a slight recovery in December, but broader economic concerns remained.

In the US, the manufacturing PMI dropped in December, but the services sector saw growth.

The USD rose 1.54% against the JPY during the week, driven by stronger-than-expected US jobs data and ongoing concerns over Japan’s economic performance.

In Japan, economic data pointed to a slowdown. The Japanese manufacturing PMI dropped to 48.5 in December, indicating contraction in the sector, while the services sector showed only modest growth. Japan's industrial production fell 0.3% in November and retail sales were weaker than expected, raising concerns about the pace of economic recovery. The Bank of Japan’s continued ultra-loose monetary policy and its commitment to maintaining low interest rates also weighed on the yen.

Meanwhile, in the US, strong labor market reinforced expectations that the Federal Reserve will keep interest rates higher for a prolonged period, which supported the USD.

The GBP closed 0.16% lower against the USD during the week, as a combination of mixed UK economic data and strong US labor market reports weighed on the currency.

In the UK, economic indicators presented a mixed outlook. The UK manufacturing PMI unexpectedly dropped to 48.1 in December, signaling a contraction in the sector, while the services sector showed resilience with a slight improvement. UK retail sales came in weaker than expected in November, reflecting ongoing challenges in consumer spending. The Bank of England's recent dovish signals, suggesting a cautious approach to further tightening, added to pressure on the pound.

Meanwhile, in the US, the economy added 232,000 jobs in the week ending 14 December 2024, exceeding market expectations.

The GBP rose 1.42% against the JPY during the week, as mixed UK economic data combined with a strong US labor market report weighed on the pound.

In the UK, manufacturing PMI dropped to 47.8 in December, indicating ongoing contraction in the sector, while the services sector showed modest growth. UK retail sales underperformed expectations in November, highlighting persistent weakness in consumer spending. The Bank of England’s cautious stance on rate hikes raised concerns over slower growth and ongoing inflation pressures in the UK.

Meanwhile, the Japanese manufacturing PMI fell to 48.5 in December, signaling continued contraction. Japan’s industrial production dropped 0.3% in November and retail sales were weaker than expected. Despite these challenges, the Bank of Japan maintained its ultra-loose monetary policy.

Oil prices fell last week pressured by concerns over slowing demand growth in 2025, particularly in China, the world's largest crude importer. The strengthening US dollar added to the downward pressure, as a robust dollar makes oil more expensive for holders of other currencies, potentially dampening demand.

Market sentiment was further weighed down by cautious signals from central bankers in the US and Europe. Both indicated limited room for additional monetary policy easing, raising fears that weaker economic activity could negatively impact oil demand in the coming year. Although the US Federal Reserve implemented a quarter-percentage-point rate cut as expected, Federal Reserve Chair Jerome Powell emphasized that persistent inflation challenges might necessitate a more cautious approach to further rate reductions in 2024.

Adding to the geopolitical tensions, US President-elect Donald Trump issued a stark warning to the European Union.

Gold prices dropped last week, as the U.S. dollar strengthened and Treasury yields rose, driven by the U.S. Federal Reserve’s (Fed) projection of fewer than expected interest rate cuts for the upcoming year amid ongoing inflationary pressures.

Adding to the negative sentiment, robust U.S. gross domestic product (GDP) and retail sales data further boosted the dollar, putting additional pressure on gold prices. The Fed revised its rate cut forecast to two from four in its prior projections, signaling a more cautious approach as inflation remains elevated in the U.S. through 2025.

Additionally, the Fed’s stance on maintaining tighter monetary policy reduced gold’s appeal. As the Fed shifts to a more gradual easing cycle, uncertainty surrounding inflation and economic growth continues to impact gold markets, contributing to recent declines.

Bitcoin's price declined last week, weighed down by hawkish US Federal Reserve policy announcements and remarks. The US Fed’s 25-basis-point rate cut, alongside projections for only two quarter-point reductions in 2025, fell short of market expectations, dampening investor sentiment. Federal Reserve Chair Jerome Powell’s rejection of the idea of the Fed holding Bitcoin reserves added further pressure on the cryptocurrency market.

Amid the downturn, optimism emerged as President-elect Donald Trump endorsed a national Bitcoin reserve, and MicroStrategy Inc. prepared for its inclusion in the Nasdaq 100. MicroStrategy’s recent $1.5 billion Bitcoin purchase has bolstered investor confidence. Additionally, social media discussions about "buying the dip" surged to an eight-month high, reflecting continued interest in Bitcoin despite short-term volatility. The combination of market challenges and long-term optimism leaves Bitcoin at a pivotal point.