AUD/USD Stabilizes Near Highs, Bulls Seek Further Gains

Blue River

Forex

Economic

Technical Analysis

Summary:

Looking at EUR/USD, the pair failed to settle above 1.1800 and recently saw a minor pullback. The main support sits at 1.1700.

Key Highlights

AUD/USD started a fresh increase above the 0.6650 zone.

It could extend gains if it clears the 0.6725 resistance on the 4-hour chart.

EUR/USD is struggling to continue higher above 1.1800.

WTI Crude Oil could aim for a steady recovery if it clears the $60.00 pivot level.

AUD/USD Technical Analysis

The Aussie Dollar started a fresh increase above 0.6650 against the US Dollar. AUD/USD climbed higher above 0.6680 to enter a positive zone.

Looking at the 4-hour chart, the pair cleared a key bullish flag resistance to start the recent upward movement. The pair settled above 0.6660, the 200 simple moving average (green, 4-hour), and the 100 simple moving average (red, 4-hour).

A high was formed at 0.6727 before the pair started a consolidation phase. The pair dipped below the 23.6% Fib retracement level of the upward move from the 0.6592 swing low to the 0.6727 high.

On the downside, there is key support at 0.6660 and the 50% Fib retracement. It is also close to the 100-SMA. A downside break below the 100-SMA might spark bearish moves. The next major support could be 0.6640, below which the pair might dive and test 0.6600.

Immediate resistance sits near 0.6725. The first key hurdle is seen near 0.6750. A close above 0.6750 could open the doors for a move toward 0.6800. Any more gains could set the pace for a steady increase toward 0.6840.

Looking at EUR/USD, the pair failed to settle above 1.1800 and recently saw a minor pullback. The main support sits at 1.1700.

Upcoming Key Economic Events:

US Initial Jobless Claims – Forecast 220K, versus 214K previous.

Source: ACTIONFOREX

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Gerik

Economic

Forex

Dollar Declines Sharply as Fed Leads Global Policy Divergence

In 2025, the U.S. dollar suffered its biggest annual decline since 2017, falling 9.5% against a basket of major currencies. This sharp depreciation was driven by a combination of Federal Reserve interest rate cuts, a Trump-initiated trade war, and growing market skepticism about the dollar’s long-term safe-haven status.

The downward trend began in April, following a series of aggressive tariffs imposed by President Trump on key trade partners. This policy shift eroded investor confidence in the U.S. growth outlook and triggered a sustained sell-off in the dollar, with the currency at one point down nearly 15% before partially recovering.

However, the resumption of the Fed’s easing cycle in September its third in less than 18 months reignited downward pressure. As global central banks like the European Central Bank (ECB) held rates steady or revised growth projections upward, the Fed’s stance increasingly stood out as dovish, prompting further declines in the dollar’s relative value.

Euro and Pound Strengthen as Policy Divergence Widens

The euro led the gains, appreciating nearly 14% to 1.17 USD, its strongest level since 2021. Currency strategists at Deutsche Bank now forecast the euro could climb to 1.20 USD by late 2026. Similarly, the British pound is projected to rise from 1.33 to 1.36 USD in the same period, supported by firm economic data and stable monetary policy from the Bank of England.

This divergence in monetary policy has created a clear cause-and-effect pattern: as the Fed loosens, the dollar weakens, while other central banks standing pat or tightening bolster their respective currencies.

Market Expectations Point to Further U.S. Easing in 2026

Traders now anticipate two to three additional rate cuts from the Fed in 2026, each by 25 basis points. This expectation reflects the Fed’s emphasis on counteracting the economic slowdown and rising unemployment, despite inflation still hovering above its 2% target.

ING’s chief international economist James Knightley commented that the Fed is “clearly in a loosening phase,” diverging from its global peers, and that this policy stance is likely to continue pressuring the dollar through 2026.

Trump’s Economic Policy Sparks Currency Market Volatility

Investor anxiety has also intensified amid speculation over President Trump’s influence on Fed leadership, as Jerome Powell’s term ends in May. One top contender, Kevin Hassett, is seen by many in markets as more aligned with Trump’s interventionist economic agenda. Analysts warn that if the next Fed chair is perceived as overly accommodative or politically motivated, the dollar may face deeper losses.

According to a Financial Times report, bond investors recently voiced concerns to the U.S. Treasury over a Fed potentially dominated by Trump allies, citing fears of more aggressive rate cuts and unpredictable policy behavior.

Hedging Rises as Investors Reassess Dollar Exposure

The weakening dollar has had mixed implications. It has benefited U.S. exporters, whose goods become more competitive abroad, but hurt European firms reliant on revenue from American markets. Meanwhile, foreign investors are increasingly hedging their dollar exposure when buying U.S. equities, reflecting heightened sensitivity to exchange rate risk.

George Saravelos of Deutsche Bank noted that a growing number of European investors are deploying currency derivatives to manage dollar volatility, a trend that itself reinforces downward pressure on the greenback.

Resilient Tech May Cap Dollar Losses

Despite macro uncertainty, some analysts remain cautiously optimistic. SocGen strategist Kit Juckes argued that while Trump’s policy unpredictability may weigh on sentiment, continued investment in AI and tech in the U.S. could support faster growth than Europe and limit the scope of further dollar depreciation.

Still, many warn that equity gains alone will not necessarily translate into currency strength. If foreign investors continue hedging and capital inflows soften, the dollar’s structural outlook remains fragile.

Dollar’s Dominance Challenged as Monetary Landscape Shifts

The U.S. dollar ends 2025 under significant pressure, weakened by aggressive Fed easing, political uncertainty, and shifting global capital flows. While some recovery was seen after September’s low, the broader trajectory remains bearish heading into 2026.

With new Fed leadership on the horizon and further cuts priced in, investors are reassessing the dollar’s role as a safe-haven and global benchmark. Whether Washington’s policy shifts signal temporary volatility or a long-term weakening of the dollar’s dominance will depend heavily on what unfolds in the year ahead.

Source: FT

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Gerik

Economic

A Giant Departs: Buffett Ends His Tenure with Timeless Impact

Warren Buffett's final day as CEO of Berkshire Hathaway marks the end of a remarkable era. For over six decades, Buffett widely known as the "Oracle of Omaha" transcended his role as a legendary investor, becoming a global symbol of ethical business, long-term thinking, and disciplined capitalism. As his protégé Greg Abel prepares to assume leadership, executives from across industries are reflecting on the enduring lessons they’ve drawn from Buffett’s leadership.

At 95, Buffett retires not just as one of the world’s richest individuals but as a voice of reason in modern finance an investor whose shareholder letters rival classic economic literature and whose wit distilled complex truths into universally understood principles.

Clarity of Thought: Plain Language for Complex Markets

One of Buffett’s most admired traits was his ability to communicate complicated financial principles using simple, relatable language. CEOs like Kayak’s Steve Hafner highlighted Buffett’s exceptional skill in transforming dense financial ideas into memorable phrases. Whether it was his famous metaphor “It’s only when the tide goes out that you learn who’s been swimming naked” or the biting realism of “Predicting rain doesn’t count; building arks does,” Buffett used language not to impress, but to inform.

His annual shareholder letters became cult reading, not only for investors but for executives seeking clarity in a noisy market. These writings elevated investor education while reinforcing transparency and common sense qualities often scarce in corporate communication.

Patience as Strategy: Holding Forever and Thinking Long-Term

Buffett's reputation for patience has shaped generations of corporate and personal investment philosophies. His oft-quoted mantra, “Our favorite holding period is forever,” wasn’t mere rhetoric. It defined a disciplined approach to capital allocation, emphasizing fundamentals over market noise.

Investor Anthony Scaramucci recounted a letter from Buffett in response to a gift of Berkshire shares to his young daughter. Buffett’s reply that even an 82-year holding period was short-term by his standards was a clear reflection of the radically long-term vision that underpinned his investment philosophy.

This outlook encouraged CEOs and fund managers alike to abandon short-termism in favor of sustainability, consistency, and discipline.

Ruthlessness in Integrity, Not Greed

Despite his market dominance, Buffett never embraced cutthroat capitalism. He consistently upheld integrity as non-negotiable, famously warning his employees: “Lose money for the firm and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”

Such values earned him respect beyond his wealth. Larry Restieri, CEO of Hightower, emphasized that Buffett’s true excellence came from principled execution and ethical leadership, even while dealing with some of Wall Street’s most aggressive players.

Wealth Without Possession: A New Philosophy of Giving

Buffett’s views on wealth also redefined success. Despite commanding a net worth near $150 billion, he championed frugality, purpose, and social contribution. As a co-founder of the Giving Pledge, Buffett encouraged the ultra-wealthy to dedicate most of their fortunes to philanthropy. Yet, his definition of giving extended beyond money.

In a 2025 reflection, he wrote: “When you help someone in any of thousands of ways, you help the world. Kindness is costless but also priceless.” This sentiment echoed his belief that wealth should empower, not entrap “Too often, a vast collection of possessions ends up possessing its owner.”

A Legacy Measured in Principles, Not Just Profit

Warren Buffett’s departure from the helm of Berkshire Hathaway signals far more than a leadership transition it marks the retirement of a uniquely principled era of capitalism. His success was not only financial, but philosophical: clear thinking, ethical rigor, and human decency in business.

The global economy may evolve, markets may fluctuate, and leadership may change hands, but the Buffett blueprint long-term thinking, honest communication, and value-driven leadership remains a model for future generations of entrepreneurs, investors, and executives alike. As the business world turns a page, it does so still guided by the timeless lessons of its most enduring teacher.

Source: CNN

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Samantha Luan

Political

The U.S. Justice Department revealed it has 5.2 million pages of Epstein files left to review and needs 400 lawyers from four different department offices to help with the process through late January, according to a government document reviewed by Reuters on Tuesday.

This is likely to extend the final release of the documents to much later than expected after a December 19 deadline set by Congress, the document said.

The White House and the Justice Department did not immediately respond to Reuters' requests for comment.

The Trump administration ordered the Justice Department to release the files tied to criminal probes of Jeffrey Epstein, the late financier and convicted sex offender, who was friends with U.S. President Donald Trump in the 1990s, in compliance with a transparency law passed by Congress last month.

Collectively, the Criminal Division, the National Security Division, the FBI and the US Attorney's office in Manhattan are providing 400 attorneys to review the files, the document said, a more precise, and potentially much larger, figure than previous estimates from the department.

The review will occur between January 5-23, the document added.

Department leaders are offering telework options and time off awards as incentives for volunteers, the document said, adding that lawyers who assist will be expected to devote three to five hours a day to review about 1,000 documents a day.

The DOJ said last week it had uncovered more than a million additional documents potentially linked to Epstein.

So far, the disclosures have been heavily redacted, frustrating some Republicans and doing little to quell a scandal that threatens the party ahead of the 2026 midterm elections.

The law, approved by Congress with broad bipartisan support, requires all Epstein-related files to be made public, despite Trump's months-long effort to keep them sealed. Under the statute, all documents were to be released by December 19, with redactions to protect victims.

Trump knew Epstein socially in the 1990s and early 2000s. He has said their association ended in the mid-2000s and that he was never aware of the financier's sexual abuse.

Epstein was convicted in Florida in 2008 of procuring a person under the age of 18 for prostitution. The Justice Department charged him with sex trafficking in 2019. Epstein was found dead in 2019 in a New York jail and his death was ruled a suicide.

In a message shared on X last week, the Justice Department said, opens new tab, "We have lawyers working around the clock to review and make the legally required redactions to protect victims, and we will release the documents as soon as possible. Due to the mass volume of material, this process may take a few more weeks."

Source: Reuters

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Justin

Political

Economic

Commodity

India extended a tariff on steel imports for three years, marking the nation's latest effort to shield its domestic industry from a glut.

An import levy of 11% to 12% was proposed for some products, the finance ministry said in an order on Tuesday (Dec 30). The measures were first introduced in April for 200 days.

India is the latest country to respond to a global oversupply that's driven prices to multi-year lows, with elevated flows from China. A surge in cheap imports from the top producer has hurt local producers, including JSW Steel Ltd, while forcing some smaller mills to shut down even as domestic demand stays firm.

India's steel industry has expanded rapidly over the past decade, yet its output remains just a fraction of China's. Producers are betting on long-term gains driven by accelerating urbanisation and industrial growth. The duty offers long-awaited relief for mills, which have been pushing for action.

Indian steelmakers' shares rose on Wednesday, with state-owned Steel Authority of India Ltd gaining as much as 4.2%, Tata Steel Ltd up as much as 3.2% and JSW Steel rallying more than 5%.

Source: Theedgemarkets

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Winkelmann

Political

Economic

China will implement more proactive policies in 2026 aimed at supporting long-term growth, with its economy expected to meet Beijing's growth target of about 5% this year, state media reported President Xi Jinping as saying on Wednesday.

The economy is expected to have grown to about 140 trillion yuan ($20 trillion) in 2025, Xi said in his address at a New Year's tea party of top Chinese Communist Party officials, state broadcaster CCTV said.

"Our country's economy is expected to move forward under pressure...showing strong resilience and vitality," Xi said in his speech.

The country will promote effective qualitative improvement and reasonable quantitative growth in the economy, Xi said, while maintaining social harmony and stability.

China's economy is expected to meet its "around 5%" growth target for 2025, even as momentum faltered towards year-end, weighed down by soft household consumption, persistent deflation and a prolonged property sector crisis.

Xi's message reinforces recent government pledges to roll out measures for boosting people's incomes and supporting consumption and investment to drive growth.

The central government has allocated 62.5 billion yuan from special treasury bond proceeds to local governments to fund the consumer goods trade-in scheme next year, confirming that Beijing would continue to spur household demand through the programme.

China's state planner has also released early investment plans for 2026, including two major construction projects, involving about 295 billion yuan in central budget funding, in its latest effort to boost investment and support economic growth.

($1 = 6.9885 yuan)

Source: Investing

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Gerik

Economic

Rate Cut Approved Amid Disagreement Over Economic Trajectory

The minutes from the Federal Reserve’s December 9–10 policy meeting reveal a central bank at a crossroads. While the quarter-point rate cut to a 3.5%–3.75% target range was ultimately approved, it came only after what the Fed described as a "deeply nuanced debate" over the appropriate response to recent economic signals. Even among those who backed the cut, some acknowledged that the choice was "finely balanced" and could have just as easily gone the other way.

This was the third consecutive rate reduction of 2025, enacted in response to a slowdown in monthly job creation and a gradual rise in unemployment. Yet the minutes reflect a growing divergence within the Federal Open Market Committee (FOMC) on how best to proceed, with officials now facing conflicting economic signals: inflation that remains above target and a labor market that is losing momentum.

Dissent on Both Sides Reflects Unusual Policy Split

Six policymakers opposed the rate cut in the Fed’s updated economic projections, and two of them officially dissented in the final vote highlighting an increasingly rare duality of disagreement within the central bank. The division was not along traditional hawkish-dovish lines; rather, it reflected differing assessments of inflation persistence versus employment deterioration.

Some participants justified the cut as a forward-looking move to prevent further labor market weakening. Others argued that progress toward the 2% inflation goal had stalled, warning that easing policy too soon might reignite price pressures. This internal divide on both timing and magnitude of future cuts has become more pronounced, marking the second consecutive meeting where such cross-cutting dissents occurred.

Fed Seeks Data Clarity Amid Gaps from Government Shutdown

Further complicating policy decisions was the 43-day U.S. government shutdown, which delayed the release of critical economic indicators and contributed to the uncertainty surrounding the Fed’s inflation and labor assessments. The minutes noted that the "lack of official data" made it harder for some members to fully justify or reject the rate cut, reinforcing the desire among skeptics to wait for a fuller dataset before making further moves.

The Fed will next receive fresh inflation and jobs data on January 9 and January 13, respectively, and these readings are likely to play a decisive role in shaping the committee’s stance for its next meeting on January 27–28.

Rates Likely on Hold as Fed Seeks Clearer Signals

While December's rate cut implies a continued tilt toward accommodation, the policy language and forward guidance have become more neutral, suggesting that further cuts are not guaranteed. The Fed’s projections indicate only one rate cut for 2026, and the committee appears inclined to pause unless clear evidence emerges of either accelerating unemployment or renewed disinflation.

This wait-and-see approach reflects a causal reasoning structure within the Fed: interest rate policy will not lead market expectations but will react to confirmed macroeconomic shifts. If inflation resumes its descent, further easing becomes likely. Conversely, if price pressures persist and employment stabilizes, the Fed may opt for a prolonged hold.

Fed Faces a Narrow Path Between Risks in 2026

The December FOMC minutes illustrate a central bank caught between the crosscurrents of softening labor markets and stubborn inflation. While the latest rate cut aims to safeguard growth, the divided views signal that the Fed is increasingly cautious about missteps that could either undercut recovery or reignite inflation.

Heading into 2026, monetary policy is likely to remain data-dependent and finely calibrated, with the Fed reluctant to commit to any trajectory in the absence of clearer macroeconomic direction. For markets and households alike, uncertainty remains the prevailing theme as the central bank navigates its dual mandate in a post-pandemic, post-inflation economy.