Markets diverged sharply on Wednesday as softer-than-expected UK inflation data sparked currency volatility while geopolitical tensions in energy markets overshadowed growing skepticism about artificial intelligence valuations in equity markets.
Check out the forex news and economic updates you may have missed in the latest trading session!
Forex News Headlines & Data:
- U.S. President Trump ordered a ‘total and complete blockade’ of sanctioned oil tankers coming to and leaving Venezuela
- New Zealand Westpac Consumer Confidence for December 31, 2025: 96.5 (91.2 forecast; 90.9 previous)
- U.S. API Crude Oil Stock Change for December 12, 2025: -9.3M (-4.8M previous)
- Japan Machinery Orders for October 2025: 12.5% y/y (3.2% y/y forecast; 11.6% y/y previous); 7.0% m/m (-2.6% m/m forecast; 4.2% m/m previous)
- Japan Balance of Trade for November 2025: 322.2B (65.0B forecast; -231.8B previous)
- Australia Westpac Leading Index for November 2025: 0.0% m/m (0.0% m/m forecast; 0.1% m/m previous)
- U.K. Consumer Price Index Growth Rate for November 2025: 3.2% y/y (3.4% y/y forecast; 3.6% y/y previous); -0.2% m/m (-0.1% m/m forecast; 0.4% m/m previous)
- Germany Ifo Business Climate for December 2025: 87.6 (88.5 forecast; 88.1 previous)
- Euro area Wage Growth for September 30, 2025: 3.0% y/y (3.2% y/y forecast; 3.7% y/y previous)
- Euro area CPI Rate Final for November 2025: 2.1% y/y (2.2% y/y forecast; 2.1% y/y previous); -0.3% m/m (-0.3% m/m forecast; 0.2% m/m previous)
- U.K. CBI Industrial Trends Orders for December 2025: -32.0 (-34.0 forecast; -37.0 previous)
- U.S. MBA 30-Year Mortgage Rate for December 12, 2025: 6.38% (6.33% previous)
- U.S. MBA Mortgage Applications for December 12, 2025: -3.8% (4.8% previous)
- Fed Governor Christopher Waller said policy remains restrictive and that the Fed should continue cutting rates gradually as inflation is expected to ease over the next few months while the labor market softens but does not collapse.
- Canada Foreign Securities Purchases for October 2025: 46.62B (31.32B previous)
- The SNB’s Quarterly Bulletin 4/2025 reiterated that the policy rate remains at 0%, with inflation forecast to stay within the price-stability range and only slightly revised down in the near term while medium‑term pressures are broadly unchanged.
- EIA Crude Oil Stocks Change for December 12, 2025: -1.27M (-1.81M previous)
Broad Market Price Action:
Wednesday delivered a complex session of diverging asset performance as geopolitical energy risks collided with growing concerns about technology sector valuations and mixed signals from monetary policy officials.
WTI crude oil emerged as the session’s strongest performer, rallying 3.46% to close at $56.80 per barrel. The start upward move correlated with President Trump’s announcement of a “total and complete blockade” of sanctioned Venezuelan oil tankers. The rally likely received additional support from a larger-than-expected 9.3 million barrel decline in API data, followed by the EIA crude inventory report showing a drawdown of 1.27 million barrels.
Gold posted gains of 0.96%, closing around $4,343 per ounce. The precious metal experienced low volatility during the London session before strengthening steadily through the US afternoon. With no direct gold-specific catalysts to point to, the advance likely reflected ongoing safe-haven demand amid geopolitical tensions and positioning ahead of Thursday’s dense economic calendar, which includes monetary policy decisions from both the Bank of England and European Central Bank.
U.S. equities declined as technology shares faced renewed pressure. The S&P 500 dropped 0.76% to 6,738, with losses accelerating during the US session as the index breached its 50-day moving average. The selloff appeared driven by mounting skepticism about artificial intelligence infrastructure spending and valuation concerns in mega-cap technology companies. The selloff came despite Fed Governor Waller’s comments suggesting support for further rate cuts. The equal-weighted S&P 500 held up notably better than the cap-weighted index, reflecting rotation pressure out of high-valuation tech stocks rather than broad market distress.
Bitcoin extended recent losses, falling 2.04% to close around $85,958. The cryptocurrency traded lower throughout most of the session with no apparent direct catalysts, possibly reflecting broader risk-off sentiment in speculative assets.
The 10-year Treasury yield edged up 0.05% to approximately 4.20%. Yields traded mostly sideways through the Asian and London sessions despite the softer UK and eurozone inflation data. Following Fed Governor Waller’s remarks around 13:30 GMT—in which he indicated policy remains restrictive with room for gradual rate cuts—yields initially dipped before stabilizing. The muted bond market reaction suggested traders were parsing Waller’s dovish guidance against his caveat that “there’s no rush” to cut rates given elevated inflation.
FX Market Behavior: U.S. Dollar vs. Majors
The U.S. dollar experienced choppy trading on Wednesday, ultimately emerging as the best performing major currency despite an intraday journey that saw session-to-session shifts in direction and momentum.
During the Asian session, the dollar traded net higher against the major currencies, and with no direct economic news to point to, it’s likely rising geopolitical tensions between the U.S. and Venezuela may have pushed some capital flow into the Greenback for safety.
The London session brought the day’s most significant economic catalyst from the currency space. The dollar traded choppy and mostly sideways as traders likely shifted their focus to the UK inflation report. The softer-than-expected readings sparked a sharp decline in sterling as traders increased Bank of England rate cut expectations, with the next full 25 basis point reduction now priced for April 2026 versus July 2026 prior to the data.
Germany’s Ifo business climate index also disappointed during the London session, falling to 87.6 versus 88.5 expected, adding to the dovish European backdrop but generating limited immediate dollar reaction. Euro area final CPI confirmed the preliminary 2.1% reading with wage growth also coming in softer than forecast at 3.0% versus 3.2% expected.
The U.S. session opened with the dollar initially trading net lower against the major currencies, possibly reflecting pre-positioning ahead of Fed Governor Christopher Waller’s scheduled appearance. Waller’s comments around 13:30 GMT provided a measured dovish tone, stating that monetary policy settings are up to 100 basis points above neutral and expressing support for gradually bringing rates down as inflation eases. However, he emphasized “there’s no rush” given inflation remains elevated. The dollar rebounded ahead of the London close and stabilized for the rest of the session, possibly due to broad risk aversion sentiment as equities and risk assets fell on artificial intelligence infrastructure spending and valuation concerns.
At the Wednesday close, the dollar posted net gains against most major currencies, with its strongest performance coming against the Japanese yen and Australian dollar. The dollar’s resilience during the US session despite Waller’s rate cut support suggested that relative growth concerns in other regions and broad market risk aversion likely provided underlying support for the greenback.
Upcoming Potential Catalysts on the Economic Calendar
- Australia Consumer Inflation Expectations for December 2025 at 12:00 am GMT
- Swiss Balance of Trade for November 2025 at 7:00 am GMT
- France Business Confidence for December 2025 at 7:45 am GMT
- Euro area ECB Buch Speech at 10:00 am GMT
- Canada CFIB Business Barometer for December 2025 at 12:00 pm GMT
- Bank of England Official Bank Rate for December 18, 2025 at 12:00 pm GMT
- European Central Bank Interest Rate Decision for December 18, 2025 at 1:15 pm GMT
- Canada Average Weekly Earnings for October 2025 at 1:30 pm GMT
- U.S. Consumer Price Index Growth Rate for November 2025
- U.S. Initial Jobless Claims for December 13, 2025 at 1:30 pm GMT
- Philadelphia Fed Manufacturing Index for December 2025 at 1:30 pm GMT
- Euro area ECB Press Conference at 1:45 pm GMT
- U.S. Leading Index for November 2025
- Kansas Fed Manufacturing Index for December 2025 at 4:00 pm GMT
Thursday’s calendar presents elevated volatility potential with simultaneous monetary policy decisions from the Bank of England and European Central Bank. Following Wednesday’s softer-than-expected UK inflation data, markets are pricing increased odds of a BoE rate cut with potentially quicker follow-up cuts in 2026. The ECB decision arrives amid ongoing eurozone growth concerns and wage moderation, with traders watching for signals on whether or not future easing is still in the cards.
During the US session, weekly initial jobless claims and the November CPI report could spark additional volatility, though data quality concerns stemming from the recent government shutdown may limit market reactions. The ECB press conference at 1:45 pm GMT will be closely monitored for commentary on growth risks and the inflation outlook following Wednesday’s softer wage growth data.
Stay frosty out there, forex friends, and don’t forget to check out our Forex Correlation Calculator when planning to take on risk!
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