Good morning traders, Samuel Leach here with your daily market brief for Friday, December 19, 2025. As we head into the final trading day before the Christmas holiday week, the markets are presenting a mixed but fascinating picture. Yesterday saw a much-needed rebound in US equities, driven by some surprisingly cool inflation data, but the forex markets remain tight and indecisive. Let’s break down what’s moving the markets and what you should be watching today.
Stock Market Outlook: A Fragile Rebound
The big news yesterday was the snap of a four-day losing streak for the S&P 500 and Dow Jones Industrial Average. The Nasdaq led the charge with a solid 1.38% jump, fueled by a rebound in tech stocks and strong earnings from Micron (MU). This rally was almost entirely driven by the latest Consumer Price Index (CPI) report, which showed inflation cooling at a faster-than-expected pace. This has reignited hopes that the Federal Reserve might be more aggressive with rate cuts in the coming year.
However, I’d caution against getting too carried away. While the headline numbers look good, there are some methodological questions around the CPI data due to the recent government shutdown. This has led to some skepticism in the market, and we saw futures waver overnight. The reality is that despite yesterday’s pop, the major indices are still on track for a losing week, and the much-hoped-for “Santa Claus rally” is looking a bit shaky.
| Index | Closing Price (Dec 18) | Daily Change | Weekly Trend |
|---|---|---|---|
| S&P 500 | 6,774.76 | +0.79% | Down ~1% |
| Nasdaq Composite | 23,006.36 | +1.38% | Down ~1% |
| Dow Jones | 47,951.85 | +0.14% | Slightly Positive |
Today, all eyes will be on the University of Michigan’s consumer sentiment report. This will give us the final piece of the puzzle on the state of the US consumer before the holidays. A strong reading could give the market another leg up, but a weak number could see us give back some of yesterday’s gains. I’ll be watching for a rotation out of tech to continue, which could put a damper on any broad market rally.
Forex Market Outlook: A Coiled Spring
In the currency markets, the word of the day is ‘subdued’. Despite a raft of economic data, major pairs have been trading in incredibly tight ranges. The euro saw some slight weakness after dovish comments from the ECB, while sterling gave back its initial gains after the Bank of England’s policy announcement. The dollar, meanwhile, is being pulled in two directions. The soft inflation data is a headwind, but the uncertainty around the data’s reliability is providing some support.
| Currency Pair | Current Level | Key Drivers |
|---|---|---|
| USD/CAD | ~1.3780 | Weaker USD vs. Stable CAD (supported by oil) |
| EUR/USD | Under Pressure | Dovish ECB, USD uncertainty |
| GBP/USD | Volatile | Dovish BoE, giving back recent gains |
The key takeaway here is that the forex market is a coiled spring, waiting for a clear catalyst. The upcoming Canadian retail sales data could provide a spark for USD/CAD, but I suspect we’ll see this range-bound trading continue into the holiday period. The bigger picture is that central bank dovishness is becoming the dominant theme, which could lead to some interesting opportunities in the new year.
Final Thoughts
As we wrap up the week, the key is to remain nimble. The stock market rebound is fragile, and the forex markets are waiting for a clear signal. Don’t get caught up in the holiday cheer and make any rash decisions. Keep an eye on the consumer sentiment data today, and be prepared for some potential volatility as we head into the close. I’ll be back on Monday to break down all the action. Trade smart, and have a great weekend.
Disclaimer: This is not investment advice. The information provided is for educational purposes only. Please do your own research before making any investment decisions.
