Market momentum remains shaky early Friday, continuing recent mixed performance trends. The latest US data was mostly unimpressive, except for a weak PPI report that fueled Fed rate cut expectations and pressured the US Dollar. U.S. retail Sales showed consumer optimism, but it wasn’t enough to lift the Greenback.
Geopolitical tensions are high as Russian President Putin skipped peace talks in Turkey regarding Ukraine. Iran, meanwhile, stated it hasn’t received any new offers from the US, despite signaling readiness to halt nuclear production if all sanctions are removed. In China, Vice President Han mentioned there’s “ample room for collaboration” with the US, while the Trump administration remains divided on whether to blacklist Chinese chipmakers.
In the US, Fed Chair Jerome Powell didn’t give clear rate guidance but suggested that the Fed may adjust its communication strategy due to shifts in employment and inflation trends.
Japan's Q1 GDP growth slowed, with Tokyo officials citing broader market uncertainty. They also showed willingness to discuss FX and other matters with the US to resolve trade deadlocks.
Australia sided with China in the ongoing geopolitical issues, while New Zealand saw upbeat economic data. Canada celebrated a rebound in oil prices and the optimism surrounding its new government.
The US Dollar Index (DXY) remains under pressure in the markets, trimming most of its weekly gains. Gold prices struggle to maintain their recent rebound and are facing weekly downside pressure. EURUSD consolidates its losses amid a weaker USD, ignoring cautious remarks from ECB officials. GBPUSD is on track for a weekly gain, while USDJPY looks set to break its 3-week uptrend. AUDUSD and NZDUSD show mild gains, while USDCAD drops for the second consecutive day.
Crude Oil struggles to hold on to its late Thursday bounce, while cryptocurrencies pare down weekly losses. Equities continue to see modest movements.
EURUSD sees mild gains, holding onto the previous day's rebound thanks to a weaker US Dollar, but remains down for the week. Despite cautious remarks from ECB officials Kazāks and Villeroy, the pair found support from news that the EU’s Sefcovic and US Commerce Secretary Lutnick agreed to speed up trade talks. EU’s Q1 growth and employment data were mixed, though monthly Industrial Production showed improvement.
GBPUSD shows relative strength, heading for a weekly gain. Bank of England officials remain optimistic about the UK economy, despite less-than-strong data, citing Britain’s success in securing trade deals with major economies.
USDJPY drops for the fourth straight day, with Japan’s Q1 GDP weaker, though Industrial Production improved. Japan’s Finance Minister Kato requested a meeting with US official Bassent to discuss a potential trade deal. Meanwhile, BOJ officials continue to criticize US trade policies, adding uncertainty to the market. The Yen’s safe-haven demand continues to weigh on USDJPY.
AUD, NZD, and CAD remain mildly stronger, holding onto recent gains, though NZD struggles for the week while AUD and CAD benefit from the latest rebound. Strong Australian data and optimism linked to China likely supported AUDUSD buyers, despite Canberra siding with China and not joining the US in the trade war.
NZDUSD is firmer today, buoyed by positive results from New Zealand’s Inflation Expectations and Manufacturing PMI.
USDCAD is trimming weekly gains, falling for two days despite optimism around Canada’s government and its global relations. This comes even as crude oil prices — Canada’s key export — face uncertainty, with Thursday’s rebound quickly fading.
The US Dollar’s weakness and market indecision helped Gold (XAUUSD) make its biggest daily jump in over a week, despite hitting a monthly low earlier. However, Gold remains under pressure for the week as traders await more positive news on US trade deals following the Sino-American truce. Meanwhile, ongoing Russia-Ukraine tensions, stalled US-Iran talks, and geopolitical unrest in Gaza and India-Pakistan favor safe-haven demand for gold.
Despite a slight bounce in Oil prices from stalled US-Iran talks (where Tehran offered to halt nuclear plans if sanctions are lifted), oil remains under pressure for the week, dipping early Friday. Rising output and softer energy demand, due to the trade war and challenges to supply from looming Russia sanctions and OPEC+ production hikes, are weighing on oil traders.
Meanwhile, cryptocurrencies are edging higher but remain uncertain for the week, after hitting multi-month highs earlier. Traders are awaiting more clarity on industry regulations and potential relief from the Trump administration, with key events next week keeping the market on edge.
The US-China truce initially sparked optimism, but traders are now focused on upcoming US housing data and the University of Michigan’s Consumer Sentiment Index and Inflation Expectations for May. Mid-tier central bankers from Europe, the UK, and the US may also move the market.
However, the spotlight remains on US trade deals, political tensions, and global risk factors like Russia-Ukraine, Gaza, and India-Pakistan tensions.
Overall, it’s expected to be a slow Friday unless any surprises arise. The US Dollar might see a corrective bounce in the North American session, putting additional pressure on commodities and major currencies (except JPY). Antipodean currencies could trim weekly gains, and cryptos may dribble. That said, the Gold price is likely set for the weekly loss and a clear downside break of $3,120 could trigger the much-awaited pullback in the yellow metal prices.
May the trading luck be with you!
