Asian Open

AUD/USD plunged alongside Wall Street indices following the Fed's last meeting of the year. And if Santa’s rally is to kick in at all this year, it could be to pick up some of the crumbs left during yesterday’s volatile selloff.

A decent bullish reversal candle has formed on the ASX 200 on Tuesday, which begs the question as to whether Santa’s rally is about to kick into gear. Although it is the FOMC meeting within the next 24 hours which could decide when or even if it starts at all.

Wall Street indices are just not on the same page at the moment, with the Nasdaq hitting a record high, while the S&P 500 trading sideways and the Dow chalks up its worst daily bearish streak in 12 years. And that's not good for the ASX.

There's nothing quite like a volatile whipsaw to snap traders out of a lull, and that is exactly what we saw on gold and silver prices on Thursday, during a day of heavy losses. While I suspect price action to remain choppy, I also think they'll grind lower from here.

AUD/USD made a minor recovery from its 13-month low late on Wednesday, but whether it can muster up the strength for a decent bounce likely sits in the hands of USD/CNH. Although the ASX 200 could be set for a bounce with the Nasdaq reaching a record high and the S&P 500 close to its own ATH.

A dovish RBA meeting and stronger US dollar ahead of a key US inflation report has kept AUD/USD pinned to a key support level. And odds of it making a meaningful recovery this week appear low, without a surprise downside miss from US CPI. Which again, seems unlikely.

China's stock markets were given a nice bump on Monday after the Politburo announced an easing of policy stance. This allowed AUD/JPY and USD/JPY to deliver strong bounce from key support levels, as the yen weakened during a risk-on session for FX and commodities.

Weak GDP figures saw interest rates traders fully price in three 25bp RBA cuts by Feb 2026. And AUD/USD could have traded much lower on Wednesday, were it not for a stronger yuan coming to the Aussies rescue later in the day.

Having fallen over 5% from the November high already, the two days of indecision around support alongside a bullish divergence suggest USD/JPY could be vulnerable to some bullish mean reversion.

I thought we might make it a bit closer to 2025 before the selloff an anticipated selloff on AUD/JPY unfolded. But we're reminded that Trump can make or break sentiment on a whim with his eye now on BRICS countries, which saw AUD/USD fall alongside the FX barometer of risk on Monday.