Trading sentiment is mixed on Monday, with slight optimism driven by China, as markets await updates on the Ukraine-Russia peace talks after the Trump-Zelenskyy dispute. Tensions around US tariffs on Canada, Mexico, and China, as well as caution ahead of Friday’s US jobs report, also affect the risk sentiment.
Meanwhile, Europe and the UK’s support for Ukraine, alongside positive China PMI and stable US inflation, are helping reduce risk aversion, allowing the US Dollar to maintain its gains.
As a result, the US Dollar Index (DXY) retreats after its first weekly gain in four, pushing Gold towards its first weekly loss in nine weeks, while other currencies and commodities dropped. Cryptocurrencies remain weak despite a weekend surge, influenced by Trump’s statements. Meanwhile, equities recover some losses, and bond markets reflect a cautious tone.
While market risk sentiment remains uncertain, the US Dollar's retreat allows major currencies to recover some losses. The EURUSD ends its three-day losing streak as traders look ahead to Thursday's European Central Bank (ECB) rate decision and Friday’s US Nonfarm Payrolls (NFP). The Euro also gets a boost from concerns that Europe might help broker a Ukraine-Russia peace deal, despite recent US tensions. However, the ECB's dovish stance limits the Euro’s gains.
GBPUSD benefits from the US Dollar’s decline and positive UK sentiment data, alongside speculation about the UK's role in the Ukraine peace talks. But concerns about the UK’s economic future under new tax policies, weak growth, and expectations of more rate cuts from the Bank of England (BoE) temper the Pound’s rebound.
USDJPY retreats from a weekly high, breaking a three-day uptrend as concerns grow over the Bank of Japan’s (BoJ) potential rate hikes. Japan’s inflation data and fears that the US could push Japan toward higher rates add pressure, along with the JPY’s safe-haven status, as traders await key data and events this week.
AUDUSD portrays its risk-barometer role early Monday, posting its first intraday gains in seven days after bouncing off a one-month low. The Aussie pair benefits from positive China PMI data and improved market sentiment driven by trade and geopolitical news. Additionally, China’s ongoing annual parliament meeting, some second-tier positive Aussie data, and mixed views on the Fed ahead of Friday’s US NFP, especially after the weak US Core PCE Price Index, support Aussie buyers, though they remain cautious about pushing prices too high.
New Zealand's Q4 terms of trade data, along with China-linked optimism and the Australian Dollar's recovery, helped NZDUSD pauses its six-day losing streak. However, the rebound lacks strong momentum due to a dovish outlook on the Reserve Bank of New Zealand (RBNZ).
Meanwhile, USDCAD fluctuates at its highest level in a month as buyers pause after six straight days of gains. The pair benefits from a broad pullback in the US Dollar and stronger Canadian GDP data, though it ignores a drop in crude oil prices, Canada’s key export. Ongoing US-Canada tensions and concerns about the Bank of Canada (BoC) rate cuts keep USDCAD on the radar for further upward potential.
Gold rebounds early Monday, aiming to recover from its first weekly loss in nine, as a softer US Dollar and China’s stimulus efforts support prices. The metal had retreated from last week’s record high amid anticipation of the US jobs report and reduced Fed rate cut bets for 2025. Easing geopolitical tensions and fading Trump tariff fears also help stabilize gold.
Meanwhile, crude oil remains under pressure after six straight weekly losses, weighed down by a stronger US Dollar, Trump’s push for increased drilling, and uncertainty over OPEC+ production plans beyond mid-2025.
Cryptocurrencies surged over the weekend as US President Donald Trump voiced support for crypto reserves and institutional buying increased. However, the rally faded amid concerns over major industry players' next moves, hacking fears, and a lack of concrete action from Trump on including cryptos in US reserves. As a result, Bitcoin (BTCUSD) and Ethereum (ETHUSD) dropped over 3% intraday, reversing their biggest daily jump in weeks amid a quiet Monday.
Monday’s focus will be on the Eurozone’s February inflation data and the US ISM Manufacturing PMI, though EURUSD buyers may stay cautious as the ECB prepares for a rate cut on Thursday and US jobs data supports a slower Fed easing. Instead, market attention will likely shift to Russia-Ukraine updates and US tariff developments. This could keep riskier assets supported, commodities recovering recent losses, and the US Dollar edging higher. Meanwhile, cryptocurrencies may consolidate gains, while equities could drift lower.
May the trading luck be with you!
