Top 7 Market Risks for Traders to Watch in December 2025
December brings major Fed moves, data shocks, holiday volatility, and high risk for prop traders.
Prop Trader Edge
November 28, 2025
Top 7 Market Risks for Traders to Watch in December 2025
December 2025 is shaping up to be a true battleground month for the markets. With the Federal Reserve’s final meeting of the year, major data releases and powerful seasonal flows all converging, this month could determine how stocks, gold and forex trades through the first quarter of 2026.
Heading into December, the market is sharply divided on whether the Federal Reserve will cut interest rates. Bond markets are leaning one way while Fed officials continue to express caution. Inflation is cooling in some areas but not others. Consumers are still spending but showing fatigue. The economy is at a crossroads, and every major event this month will influence the outcome.
For traders, especially prop traders managing strict daily and overall drawdowns, December is not a month to take lightly. It is the period where:
Volatility can explode without warning
Liquidity dries up around the holidays
Seasonality clashes with macro uncertainty
Event risk is concentrated into fewer trading days
If you are prepared, December can be one of the most profitable months of the year. If you are not, it can eat your account alive.
These are the Top 7 Market Events that will drive price action and risk appetite in the final trading month of the year.
1. December 1: Black Friday and Cyber Monday Consumer Spending Data
Consumer spending is the backbone of the U.S. economy, and this data gives the Fed its first crucial read heading into the December rate meeting.
If the numbers show strong spending, the Fed has solid justification to keep rates unchanged. This typically supports the U.S. dollar and weighs on stocks and gold.
If spending is soft, the case for a December rate cut increases sharply. This usually pushes the dollar lower while lifting stocks and gold.
This is the first major domino of the month and sets the tone for the December 10 Fed decision.
2. December 5: Non-Farm Payrolls (NFP)
The labor market is the Fed’s number one guidepost. Job data has been mixed in recent months, but a significant slowdown in job growth would dramatically increase the odds of a December rate cut.
A weak NFP report usually sends the dollar lower and gold higher and sets up stocks for an eventual rally on easing expectations.
A strong NFP keeps the Fed cautious and supports the dollar while weighing on stocks and gold.
Either way, traders should expect major moves in currencies, gold, indices and yields.
2. December 9–10: Federal Reserve Rate Decision and Dot Plot
This is the biggest event of December. The Fed will deliver its rate decision along with updated economic projections, the dot plot and Powell’s press conference.
If the Fed cuts, a year-end melt-up across risk assets becomes very likely.
If the Fed holds, Powell’s tone and the dot plot will be the true market-moving catalysts.
Markets often make their largest December move in response to this meeting.
3. December 16: Non-Farm Payrolls (NFP)
The labor market is the Fed’s number one guidepost. Job data has been mixed in recent months, but a significant slowdown in job growth would dramatically increase the odds of a December rate cut.
A weak NFP report usually sends the dollar lower and gold higher and sets up stocks for an eventual rally on easing expectations.
A strong NFP keeps the Fed cautious and supports the dollar while weighing on stocks and gold.
Either way, traders should expect major moves in currencies, gold, indices and yields.
4. December 18: CPI Inflation Report
The final inflation reading of 2025 is potentially explosive for markets. It may determine:
Whether inflation is still sticky
Whether slowing demand is easing price pressures
Whether the Fed can justify easing
A hotter-than-expected report could send stocks tumbling and boost the USD.
A softer report could kick off a renewed risk rally into year-end.
5. Mid-December: Tax-Loss Harvesting and Window Dressing
Mid-December is a period of mechanical flows that can distort markets.
Funds sell underperforming stocks to lock in tax losses
Funds buy outperforming stocks to improve year-end appearance
With stocks up sharply this year, there is strong motivation to take profits. This can create fast rotations, momentum bursts and short-term volatility that traders can capitalize on.
Don’t Miss these Great Black Friday Prop Trading Deals
If you want to trade December without putting your own capital at risk, prop firms are offering their best discounts of the year:
ThinkCapital - SAVE 40% (use this link and code EDGE)
Best CFD and Forex prop for U.S. traders
Trade on TradingView
Low spreads and fast execution
Free trial account
Blueberry Funded - SAVE 45% on Instant & 2-Step (Code: BF45)
Forex/CFD Prop Firm
Broker backed
No Time Limits
Up to $2M in capital
Axi Select - Always FREE:
The only completely free funded trader program
No challenge fee
No time limits
Broker-powered
Breakout Prop - SAVE with code: BKSAVE
Top crypto-only prop firm
