As the year draws to a close, investors and traders are bracing themselves for potential market volatility due to end-of-year flows and significant economic data releases.
Money managers may make last-minute adjustments to their portfolios ahead of the calendar year, particularly when it comes to stocks, gold, and the US dollar. The scramble to rebalance assets comes with low liquidity, leading to irrational price action on December 31 that can be partially undone on January 2.
Weekly US Jobless Claims, set to release on January 2, will serve as the first significant data point in 2025. A lower-than-expected figure could boost the US dollar and stocks while pressuring gold, whereas a higher-than-expected number could do the opposite.
The ISM Manufacturing PMI, released on Friday, is also expected to have an impact on markets. A positive reading would support stocks and the US dollar but weigh on gold, while a downbeat figure would reverse these trends.
These factors will be crucial in determining market direction in 2025. With many traders returning to markets after the holiday, even small orders could trigger larger moves due to low liquidity. Investors should exercise caution and carefully consider their trades amidst this increased volatility.
Source: https://www.fxstreet.com/analysis/three-fundamentals-year-end-flows-jobless-claims-and-ism-manufacturing-pmi-stand-out-202412300904