Global financial markets traded slightly positive early Friday as mixed geopolitical developments combined with strong US economic data and optimism that global growth can remain resilient despite trade and geopolitical tensions linked to President Donald Trump.
US initial jobless claims fell below 200,000 for the first time since the week ending November 1 and, excluding that one-off reading, marked the lowest level during the Trump administration. This reinforced the expectation that the Federal Reserve (Fed) can remain patient on its next policy move.
The data lifted the US dollar and pushed the euro to its weakest level since early December. Further support came from a six-week low in jobless claims, a four-month high in the Philadelphia Fed Manufacturing Index, and strong readings from the New York Empire State Manufacturing Index.
Rate cut expectations continued to fade, with April cut odds dropping to 37% ahead of what would be Jerome Powell’s final meeting as Fed Chair. This less dovish outlook has supported the dollar throughout the year. San Francisco Federal Reserve President Mary Daly said US monetary policy is well-positioned to respond to economic changes. Still, future decisions must be careful and deliberate due to ongoing uncertainty around inflation and employment.
President Donald Trump is expected to announce an unprecedented intervention in US energy markets, including an “emergency power auction” that would require major technology companies to help fund new electricity generation to support the rapid expansion of data centers.
Geopolitical tensions around Iran remain elevated. Reports of a US aircraft carrier moving toward the Middle East were initially seen as outdated, though Iran’s deputy ambassador to the United Nations (UN) said Tehran does not seek escalation but would respond strongly and lawfully to any aggression. Fox News later reported that at least one US aircraft carrier is heading to the region and that defence officials are preparing multiple military options, keeping escalation risks alive.
In Europe, the European Central Bank (ECB) signalled no near-term debate on interest rates. ECB Chief Economist Philip Lane said current policy settings are expected to remain a baseline for several years, provided the euro zone economy evolves broadly in line with forecasts.
The Japanese yen strengthened after Japan’s Finance Minister Katayama reiterated that foreign-exchange intervention remains an option and said he would “not exclude any options,” including possible joint action. Gains were reinforced by reports that some policymakers at the Bank of Japan (BOJ) see room to raise rates sooner than markets expect. However, the yen continues to face structural pressure, partly due to political expectations that a snap election victory for Prime Minister Sanae Takaichi would support expansionary fiscal policy, making a sustained recovery difficult.
Canada and China are moving to rebuild relations, focusing on closer cooperation in agriculture and energy.
In New Zealand, data remained supportive as the Manufacturing Purchasing Managers’ Index (PMI) rose to 56.1 in December, the strongest level since 2021, with all sub-indices expanding and new orders leading the gains.
Against this backdrop, the U.S. Dollar Index (DXY) fluctuates near a six-week high and is on track for a third straight weekly gain, pressuring EURUSD and GBPUSD and challenging gold and silver. USDJPY trimmed weekly gains, while NZDUSD and AUDUSD are set for weekly gains. USDCAD is close to snapping a two-week uptrend despite weak oil prices, Canada’s key export. Bitcoin (BTC) and Ethereum (ETH) extended recent losses but held onto weekly gains, while Asia-Pacific equities edged higher after a positive Wall Street close.
A firmer US dollar, along with mixed comments from European Central Bank (ECB) Chief Economist Philip Lane, put downside pressure on EURUSD, pushing the pair toward a third straight weekly loss. In the same vein, GBPUSD is also heading for a weekly loss despite largely upbeat data from the UK released on Thursday.
Meanwhile, USDJPY slipped to a three-day low, trimming its weekly gains, as talk of possible Japanese intervention to support the Japanese yen (JPY) and growing expectations of a Bank of Japan (BoJ) rate hike gained traction amid a quiet and lacklustre trading session.
Even as the recent strength of the US dollar challenges the Australian dollar, New Zealand dollar, and Canadian dollar, these Antipodean currencies are still heading for weekly gains due to early-week rallies and stimulus-related news linked to China. NZDUSD has added support from upbeat New Zealand Manufacturing Purchasing Managers’ Index (PMI) data discussed earlier, while improving China–Canada relations offset softer crude oil prices, Canada’s key export, helping USDCAD brace for its first weekly gain in three weeks.
Although a firmer US dollar and easing geopolitical risks are pressuring gold buyers, the precious metal is still heading toward a third straight weekly gain, mainly after refreshing its all-time high earlier in the week. Silver is also moving higher and showing more strength, supported by its strong 160% rally in 2025. However, growing challenges to the dovish Federal Reserve (Fed) bias and the firmer USD could trigger the long-awaited pullback in bullion prices if these conditions persist.
Oil prices dropped over 3.0% on Thursday after the Trump administration stepped back from possible strikes on Iran. However, risks persist after reports that Israel’s Prime Minister Benjamin Netanyahu asked President Donald Trump to delay action, keeping the door open to further escalation or a stronger US military presence. As a result, crude oil, or black gold, remains mixed for the week while falling for a third straight day on Friday.
US equities stayed firm, with technology stocks leading early gains and the Russell 2000 again outperforming on strong bank earnings. Goldman Sachs and Morgan Stanley rose sharply after their results.
Trade policy uncertainty resurfaced after the White House said the new 25% tariff on a limited set of advanced Artificial Intelligence (AI) chips is only “phase one,” with broader semiconductor measures possible. Alphabet-owned DeepMind’s Chief Executive Officer said China is only months behind leading US AI models, while China also moved to curb high-speed and algorithmic trading by restricting exchange server access.
In the US, a West Virginia lawmaker proposed allowing the state treasury to invest up to 10% of its reserves in precious metals, qualifying digital assets, and approved stablecoins. The Inflation Protection Act, introduced by Chris Rose, aims to hedge against inflation and currency debasement, supporting sentiment toward cryptocurrencies.
Friday’s focus will be on German inflation, UK GDP, Canada housing data, US Industrial Production, and FOMC speeches. A firmer US dollar, supported by strong jobless claims and manufacturing data, may pressure gold, silver, crude oil, and cryptocurrencies. EURUSD, GBPUSD, and Antipodeans face downside risks, while USDJPY may attract sellers amid talk of Japanese intervention and BOJ rate hikes. NZDUSD benefits from strong PMI data, and USDCAD is supported by China–Canada ties despite weaker oil. US equities could edge higher, though trading is likely to remain quiet amid mixed global cues.
May the trading luck be with you!
