Next week, due to the holiday break, many markets are expected to experience a calmer period. However, there are still some interesting releases to watch, such as meeting minutes from Japan and Australia and GDP data from the UK. Additionally, many stock indices are currently at critical levels following recent declines caused by the Fed's "hawkish" pivot, which could lay the groundwork for potential volatility next week. For this reason, it will be worth monitoring the USDJPY and AUDUSD currency pairs, as well as Bitcoin.
USDJPY
The USDJPY currency pair has recently recorded significant gains driven by a strong US dollar and a weak Japanese yen. On Tuesday, the Bank of Japan's (BOJ) meeting minutes from the last meeting, perceived as exceptionally dovish by the markets, will be released. Investors are not expecting further interest rate hikes, so the minutes may reveal details about such a shift. USDJPY continues to strengthen, and this trend could push the pair back to record levels.
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The AUDUSD pair is currently trading at record-low levels, last seen in October 2022 and earlier in April 2020 during the COVID-19 pandemic. The strong US dollar and the weak Australian dollar are contributing to this movement. On the next Tuesday, the Reserve Bank of Australia's (RBA) meeting minutes will also be released, potentially providing insights into the central bank's current outlook on monetary policy. Investors are currently torn between expecting a potential 25-basis-point rate cut at the next meeting in February or maintaining rates unchanged. For this reason, it will be worthwhile to keep an eye on the AUDUSD pair.
Bitcoin
Bitcoin experienced a significant drop from $108,000 to around $90,000 within just a few days following the FOMC conference. This sharp movement was also influenced by news from El Salvador, which agreed to limit Bitcoin payments as part of a loan agreement with the IMF. Bitcoin has corrected by approximately 13-15% from its peak; however, historical corrections during bull markets (assumption) have reached even 20-30%. Considering the recent dynamic correction, it will be important to monitor Bitcoin for indications of its direction in the coming weeks.
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