Markets remain cautious as traders await key data and events from the UK, Eurozone, and the US. Mixed news on US deals, growth concerns, and cautious Fed comments keep investors on edge.
Global markets saw volatility on Wednesday as US Treasury yields rose without clear triggers, raising concerns over US growth and fiscal deficits. Despite upbeat sentiment from US-China talks and Iran’s potential deal with the US, geopolitical tensions (especially in Ukraine, Gaza, and Pakistan) weighed on optimism.
Stronger yields boosted the US dollar, putting pressure on major currencies, while gold, crude oil, and cryptocurrency suffered losses. Equities ended mixed, with Antipodean currencies bouncing back from previous losses.
EURUSD recovers after retreating from a weekly high, as traders await the second readings of Eurozone Q1 GDP, Employment Change, and monthly Industrial Production. Additionally, US Retail Sales, PPI, Jobless Claims, and Fed Chair Powell's speech also remain in focus.
Euro traders are also cautious due to tensions over US trade deals, ECB statements, and the German Chancellor's position on avoiding a trade conflict with the US. That said, mixed views on US trade deals and fiscal deficit worries have kept the US Dollar in check, despite firmer yields.
The British Pound (GBP) struggles to gain momentum as mixed UK data, including GDP, Manufacturing, and Industrial Production, raises doubts about the country's economic outlook. Despite BoE's Catherine Mann highlighting the resilience of the UK labor market, these concerns challenge GBPUSD as it tries to reverse the previous day’s losses and pare weekly loss.
Meanwhile, the Japanese Yen (JPY) benefits from haven demand, keeping USDJPY bears in control for the third day, set for its first weekly loss in four. That said, the US is closer to trade deals with Japan and South Korea, and the Bank of Japan's hawkish stance adds pressure on USDJPY.
AUDUSD remains range-bound despite a positive Australian employment report and stable inflation expectations, as the dovish stance from the RBA keeps pressure on the currency. Similarly, NZDUSD and USDCAD struggle to reverse their previous moves, with no major updates from their respective economies. A decline in oil prices, a key export for Canada, challenges USDCAD sellers, despite rising optimism about the US-Canada trade deal and previously positive economic data.
Gold faces its largest weekly loss since June 2021, falling 1.5% intraday, as a stronger US Dollar and technical breakdowns weigh on the precious metal. The old market adage, 'Sell in May and Go Away,' adds to the pressure. Meanwhile, WTI Crude Oil drops 2.0%, extending losses after a surprise rise in US inventories and news of Iran's willingness to strike a deal with the US if sanctions are lifted.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) face mild selling pressure for a second day, unable to break through short-term technical resistances. On-chain activity and long liquidations are adding to the downside, though optimism from Trump and strong ETF inflows keep buyers hopeful.
After a slew of data from Australia and the UK, attention shifts to upcoming reports from the UK, the Eurozone, and the US. That said, immediate focus will be on the Eurozone’s Q1 GDP, Employment Change, and monthly Industrial Production, followed by the UK’s NIESR GDP and Canadian data on Wholesale Sales, Manufacturing Sales, and Housing Starts. Above all, the US Retail Sales, PPI, and Fed Chair Powell’s speech will likely take center stage.
While EU and US data may paint a positive picture, EURUSD could struggle to react positively if Powell maintains his hawkish stance and dismisses rate cut calls. GBP and CAD may also face pressure, and Gold could break its key $3,115 support if the US Dollar gains strength from optimistic trade deal news, Powell’s remarks, and strong US data. Cryptocurrencies might see selling pressure amid long liquidations, while equities and bond yields could remain firm.
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