The euro declined in the European market on Tuesday against a basket of global currencies, moving into negative territory versus the US dollar, as the American currency resumed its gains ahead of the release of the minutes from the Federal Reserve’s latest meeting, which are expected to show divisions among policymakers over the interest rate path in 2026.

Currency markets remain broadly calm due to thin liquidity during New Year holidays, with traders looking ahead after a disappointing year for several major currencies, led by the US dollar.

Meanwhile, expectations for a European Central Bank interest rate cut in February 2026 have eased, particularly in light of recent improvements in economic activity across the euro area, alongside expectations that this improvement will continue as downside risks recede.

Price overview

• Euro exchange rate today: the euro slipped against the dollar by 0.1% to 1.1764, from an opening level of 1.1772, recording an intraday high at 1.1779.

• The euro ended Monday’s session unchanged, following two consecutive daily losses amid correction and profit-taking from a three-month high of 1.1808.

US dollar

The US dollar index rose about 0.1% on Tuesday, resuming gains that had paused in the previous session, reflecting renewed strength in the American currency against a basket of global currencies.

Later today, the minutes of the Federal Reserve’s latest meeting are due to be released, and are expected to reveal divisions among policymakers over the US interest rate outlook in 2026. This could lead to a pullback in speculation about two rate cuts over the course of next year.

European interest rates

• Money markets currently price the probability of a 25-basis-point interest rate cut by the European Central Bank in February 2026 at below 10%.

• To reprice these expectations, investors are awaiting further economic data from the euro area, including inflation, unemployment, and wage figures.

Interest rate differential

Following the Federal Reserve’s latest decision, the interest rate gap between Europe and the United States narrowed to 160 basis points in favor of US rates, the smallest gap since May 2022, which continues to support a stronger euro versus the US dollar.

The Japanese yen declined in the Asian market on Tuesday against a basket of major and secondary currencies, moving into negative territory versus the US dollar, as the American currency resumed its gains ahead of the release of the minutes from the latest Federal Reserve meeting, which are expected to show divisions among policymakers over the interest rate path in 2026.

Currency markets remain broadly subdued due to thin liquidity amid New Year holidays, with traders looking ahead after a disappointing year for several major currencies, led by the US dollar.

Price overview

• Japanese yen exchange rate today: the dollar rose against the yen by 0.2% to 156.34, from an opening level of 156.03, recording an intraday low at 155.92.

• The yen ended Monday’s session up about 0.3% against the dollar, marking its fourth gain in the past five days, supported by the summary of opinions from the Bank of Japan’s latest monetary policy meeting.

US dollar

The US dollar index rose about 0.1% on Tuesday, resuming gains that had paused in the previous session, reflecting renewed strength in the US currency against a basket of global currencies.

Later today, the minutes of the Federal Reserve’s latest meeting will be released, and are expected to reveal divisions among policymakers over the path of US interest rates in 2026, which could reduce speculation about two rate cuts over the course of next year.

Japanese interest rates

• On Monday in Tokyo, the summary of opinions from the Bank of Japan’s latest monetary policy meeting was released. The meeting, held on December 18–19, resulted in an interest rate hike to 0.75%, the highest level since 1995.

• The summary showed a clear hawkish shift among most board members, with many pointing to the need for further rate increases in the future. They agreed that gradually raising interest rates and scaling back monetary stimulus are necessary to ensure long-term price stability.

• Market pricing for the probability of a quarter-point interest rate hike by the Bank of Japan at its January meeting remains stable at around 20%.

• To reprice these expectations, investors are awaiting further data on inflation, unemployment, and wage growth in Japan.

Santa runs on diesel. Every year, the global holiday economy relies on a short, intense surge in distillate fuel consumption to power trucks, ports, warehouses, cold-chain logistics, and backup generators — all operating under winter conditions. This holiday-driven commercial surge places heavy strain on logistics systems and exposes just how thin the safety margin has become in diesel markets that are already structurally tight, particularly in Europe.

After crude oil, diesel is the most economically important fuel in the global energy system — and Christmas reinforces that reality. In the United States, distillate demand typically rises as December begins, not primarily because of heating, but because freight activity peaks just as inventories have already entered their seasonal drawdown phase.

The latest weekly data show US diesel supply running around 4.0 million barrels per day, near the upper end of the post-pandemic range, according to the US Energy Information Administration’s weekly petroleum status report. At the same time, commercial distillate inventories have hovered around 110–115 million barrels heading into late December — well below historical early-winter averages based on EIA inventory data. This leaves very little margin for error once logistics activity accelerates in the final weeks of the year.

Europe’s situation is even tighter

Since losing Russian diesel flows, Europe has become structurally dependent on long-haul imports from the US Gulf Coast, the Middle East, and India. Gas oil inventories in Northwest Europe have struggled to rebuild to comfortable levels, a pattern reflected in Amsterdam–Rotterdam–Antwerp stock reports, while December shipping demand routinely drains whatever buffer remains.

On paper, supply appears adequate. In practice, the system becomes highly sensitive to disruption, because replacement barrels travel farther, arrive later, and compete for the same logistical capacity required to move finished goods.

What makes Christmas especially critical is that diesel demand during this period is largely price-insensitive. Parcel delivery, food distribution, cold storage, and retail restocking all expand simultaneously.

Unlike gasoline — where weaker consumer confidence can curb demand — late-December diesel consumption is tied to the physical movement of goods. Parcels do not stop moving simply because margins compress. Delivery delays quickly translate into lost sales, spoiled inventory, contractual penalties, and reputational damage. Demand is governed by calendars and contracts, not prices.

This dynamic shows up clearly in refining margins. In a typical year, diesel cracks widen in winter as heating demand overlaps with logistics demand.

In 2025, however, signals were more distorted. European diesel cracks weakened in November amid mild weather and subdued industrial activity, a trend reflected in ICE gasoil and ultra-low-sulfur diesel spreads. Yet spot premiums for prompt barrels remained firm in several regional markets, according to European distillate market assessments. This divergence between paper pricing and physical markets is precisely the type of distortion that Christmas amplifies, as immediate logistical needs override macro signals.

Refinery behavior tells the same story

Every December, refiners wish for greater operational flexibility, but holiday demand forces high utilization rates — particularly at distillate-heavy plants. US Gulf Coast refineries often run above 90% utilization through late Q4, based on EIA refinery utilization data, prioritizing diesel output even when gasoline margins weaken. This reduces system slack, making any disruption — from weather, equipment failures, or pipeline constraints — far more painful.

Exports add another layer of risk

The United States has become the marginal diesel supplier to Europe, with distillate exports often running between 1.1 and 1.3 million barrels per day, according to EIA export flow data. These barrels do not pause for Christmas. Any disruption to the export chain during this period — whether fog in the Houston Ship Channel, Atlantic storms, or congestion at Northwest European ports — occurs when European buyers have the least flexibility and inventories are already depleted.

This is where the phrase “Santa runs on diesel” becomes literal.

The seasonal holiday economy depends heavily on the reliability of distillates. Diesel is present at every step: long-haul transport, regional distribution, last-mile delivery, cold chains, backup power, port equipment, and warehouse operations. It is the fuel whose failure is delayed — but whose impact is immediate once it occurs.

There is also a clear blind spot in the energy transition that becomes visible every December. Electricity has made inroads into urban delivery and short-haul fleets, but peak holiday logistics still rely on diesel. Cold weather reduces battery range, charging infrastructure becomes congested, and payload constraints matter more as volumes surge — issues well documented in US Department of Energy analyses of electric vehicle performance in cold conditions. Even fleets that operate electric trucks often revert to diesel during the holiday peak. In practice, the system falls back on oil — specifically diesel — precisely when it is under maximum stress.

From a market perspective, diesel stress often appears before crude oil stress. Brent prices below $60 do not necessarily imply an oversupplied energy system. As highlighted in the International Energy Agency’s December oil market report, weak crude prices can coexist with tight diesel markets, volatile spot premiums, and localized supply shortages. Christmas sharpens this contradiction by compressing demand and shrinking flexibility.

Thin liquidity makes matters worse. The Christmas week is notorious for low trading volumes, even as physical markets experience peak strain — a reality often noted in year-end oil market liquidity analyses. Stress shows up first in local premiums, freight rates, and delivery delays, not in headline futures prices. This is why year-end disruptions often feel sudden: the warning signals exist, but they sit outside the most visible benchmarks and are therefore overlooked.

As markets move into the new year, this fragility may matter more than usual. Low distillate inventories, heavy reliance on exports, and limited spare refining capacity suggest diesel markets could remain vulnerable even if crude prices stay range-bound — a view consistent with the EIA’s short-term energy outlook.

Christmas does not create diesel fragility. It simply reveals it in full. Diesel is where pressure surfaces first — and Christmas narrows the margin just a little further.

Copper prices fell sharply during Monday’s trading amid thin liquidity and profit-taking as 2025 approaches its end.

Copper, a key metal for the renewable energy and industrial infrastructure sectors, is on track to post its strongest annual gain in more than 15 years, having risen by over 35% during 2025.

The metal has increasingly been grouped alongside silver and gold as an investment safe haven, amid concerns over the weakening value of the US dollar. In December, copper prices surged past $12,000 per tonne, marking their strongest rally since the post-2008 global financial crisis recovery.

In a post on X, one analyst wrote: “Copper has officially entered price discovery after decisively breaking through key resistance levels. It may prove to be one of the most important macro assets in 2026 in my view. Price discovery moves are often explosive by nature, and I believe that is the case here. Let’s go.”

According to Parthiv Jhonsa, Vice President at Anand Rathi Institutional, the sharp rise in Hindustan Copper shares — which have nearly doubled since the start of the year — is not solely driven by higher copper prices. Instead, it reflects a combination of sustained growth in production volumes, extensions of mining concession contracts, and structural constraints on the supply side.

Speaking to ET Now, Jhonsa said that copper prices reaching $13,000 per tonne on the London Metal Exchange have undoubtedly supported sentiment, but the stock’s re-rating points to deeper fundamental drivers beyond short-term price movements.

Meanwhile, the US dollar index edged down by less than 0.1% to 97.9 points by 14:44 GMT, after touching a high of 98.1 and a low of 97.9.

In US trading, March copper futures fell 4.3% to $5.58 per pound by 14:40 GMT.