Markets have remained mostly subdued throughout the week, apart from Monday’s sharp movements, as investors await crucial economic data releases. The most anticipated figures include today’s revision of the U.S. second-quarter Gross Domestic Product (GDP) and Friday’s release of the Core Personal Consumption Expenditures (PCE) Price Index, which is the Federal Reserve’s preferred measure of inflation. Adding to market caution are mixed developments surrounding global trade and political uncertainty, much of it linked to former United States President Donald Trump. Notably, concerns have emerged regarding the independence of the Federal Reserve, amid allegations that Trump is attempting to take control of the central bank by installing his chosen representatives across its twelve regional banks.
With no major economic reports released on Wednesday, market sentiment was mildly supported by stronger-than-expected earnings from Nvidia Corporation, released after the market closed. This contributed to a slight improvement in risk appetite. Consequently, the United States Dollar Index (DXY) edged lower for the third consecutive day after starting the session slightly higher. This shift in the dollar’s performance allowed major currencies, commodities, cryptocurrencies, and Antipodean currencies to recover from their earlier weekly losses, especially those stemming from Monday’s declines.
John Williams, President of the Federal Reserve Bank of New York and a permanent voting member of the Federal Open Market Committee (FOMC), gave an interview on CNBC where he emphasized the importance of maintaining the central bank’s independence. He refrained from commenting on the situation involving Federal Reserve Governor Lisa Cook but expressed support for lowering interest rates to what he described as “a more normal level,” a stance that further pressured the U.S. dollar.
On the geopolitical front, Peter Navarro, former White House Director of the Office of Trade and Manufacturing Policy, made headlines by suggesting that India could receive a 25% tariff reduction if it halts its purchases of Russian oil. He further asserted that it is essential to prevent both India and China from buying Russian energy.
In related developments, Mexico followed the protectionist example of Donald Trump by announcing new tariffs on Chinese imports as part of its budget proposal. The Mexican government stated that the move is aimed at shielding domestic industries from low-cost foreign competition.
Meanwhile, Japan’s Chief Tariff Negotiator, Hiroshi Akazawa, cancelled a planned visit to the United States that was scheduled for Thursday, citing the need for internal administrative discussions. He had planned to discuss Japanese investment plans in the U.S. In contrast, China’s top trade negotiator, Li Chenggang, arrived in Canada for talks. He described the discussions as “frank, pragmatic, and constructive,” focused on improving and expanding bilateral economic and trade relations between China and Canada.
Junko Nakagawa, a board member at the Bank of Japan, also weighed in on global trade issues, warning that uncertainty surrounding U.S. tariff policy continues to pose a serious risk to both Japan and the broader global economy. She highlighted the upcoming Tankan survey as a crucial indicator of how these trade tensions are affecting corporate sentiment.
From the Asia-Pacific region, Australia reported that Private Capital Expenditure for the second quarter of 2025 (covering the months of April through June) rose by just 0.2% quarter-on-quarter, falling short of the expected 0.7% increase, though improving from a prior reading of -0.1%. New Zealand's August edition of the ANZ Business Outlook Survey showed that business confidence rose to 49.7, up from 47.8 in July. However, the outlook for individual business activity declined slightly to 38.7%, down from 40.6% in the previous month.
In the UK, the Confederation of British Industry (CBI) reported that retail sales for August came in at -32, compared to -34 previously. This marks the eleventh consecutive monthly decline. The report also revealed ongoing weakness in the services sector, with both business confidence and activity deteriorating further in August.
In the Eurozone, Germany’s GfK Consumer Sentiment Index for September fell to -23.6, worse than the expected -22.0, indicating continued pessimism among German consumers.
In the energy sector, the latest weekly crude oil inventory data from the U.S. Energy Information Administration (EIA) showed a larger-than-expected drawdown for the second week in a row. This supported a recovery in crude oil prices from their weekly lows.
As for Nvidia Corporation, the tech giant surpassed both earnings per share and revenue forecasts in its latest results. However, the stock faced selling pressure in after-hours trading due to multiple concerns. Most notably, the company excluded its China-related revenue from third-quarter guidance, citing regulatory risks. There were also signs of slowing cloud infrastructure spending in its data center segment. Additionally, Nvidia warned that it may pursue legal action if the U.S. government attempts to claim a portion of its revenue. Meanwhile, the Financial Times reported that fabrication plants servicing Huawei Technologies are increasing production, following U.S. restrictions on Nvidia’s top-tier processors.
In other markets, cryptocurrencies staged a recovery, while major Wall Street indices ended Wednesday’s trading with modest gains. However, Thursday’s trading began on a more cautious note. Risk assets slightly retreated, with crude oil prices softening and gold giving up its two-day winning streak, which had taken it to a two-week high.
Among major currency pairs, the EURUSD exchange rate struggled to extend its late-Wednesday rebound. The GBPUSD continued higher, marking a three-day winning streak. The USDJPY declined, while the AUDUSD rose for the third day in a row. The NZDUSD also edged higher after a weak performance on Wednesday. Meanwhile, the USDCAD pair fell to a two-week low, extending its losing streak to three days.
EURUSD is still on course to break its three-week uptrend, even as it posts modest gains in recent sessions. This weakness largely stems from Monday’s sharp decline, continued trade tensions between the European Union and the United States, and growing political uncertainty in France.
Market sentiment remains cautious ahead of today’s key data releases, including the European Union’s Consumer Confidence and Industrial Production figures, as well as important economic data from the United States. These factors are adding further pressure on EURUSD traders.
Although a Federal Reserve interest rate cut in September is widely expected, the bigger concern for markets is the outlook for additional rate cuts afterward, which has been weighing on the U.S. Dollar lately. On the European side, officials from the European Central Bank (ECB) have shown a slightly optimistic tone, but this has so far failed to generate meaningful support for the euro, keeping EURUSD under pressure. Adding to the euro’s weakness, Germany’s GfK Consumer Sentiment Index for September dropped to -23.6, below expectations of -22.0, reflecting ongoing pessimism among German consumers.
The GBPUSD exchange rate remains firm despite weak domestic data and cautious remarks from Bank of England (BoE) policymaker Catherine Mann. The Confederation of British Industry (CBI) reported that UK retail sales fell again in August, registering a reading of -32 compared to -34 in July. This marks the eleventh consecutive monthly decline. The report also pointed to ongoing weakness in the services sector, with both business confidence and activity continuing to deteriorate.
Similarly, the USDJPY pair shrugged off cautious comments from Bank of Japan (BoJ) board member Junko Nakagawa, who warned about the economic risks posed by U.S. tariffs on both Japan’s domestic economy and the global outlook. Adding to the uncertainty, Japan’s Chief Trade Negotiator, Hiroshi Akazawa, canceled his planned visit to the United States, which was expected to focus on Japanese investment discussions.
Despite these developments, both GBPUSD and USDJPY remain driven more by broader market trends. A pullback in the U.S. Dollar, along with rising expectations that the Bank of Japan may need to hike interest rates at least once more in 2025—contrasting with the Federal Reserve’s increasingly dovish stance—has kept downward pressure on USD/JPY.
The U.S. Dollar’s recent pullback, combined with market anxiety, fresh stimulus news from China, and a lack of negative headlines surrounding upcoming U.S.-China trade negotiations in the United States, helped the AUDUSD pair climb for the third straight day. The pair reached its highest level since August 18, despite mixed results in Australia’s capital expenditure data.
In contrast, the NZDUSD declined for the second consecutive day. The drop followed mixed outcomes from New Zealand’s ANZ Business Confidence survey and persistent concerns over a dovish stance from the Reserve Bank of New Zealand (RBNZ).
Meanwhile, the USDCAD fell for the third day in a row, hitting its lowest level in over a week. This decline came despite a pullback in crude oil prices—Canada’s major export—after they had rebounded on Wednesday due to a larger-than-expected draw in U.S. oil inventories. The Canadian Dollar managed to hold firm, ignoring dovish comments from Bank of Canada (BoC) Governor Tiff Macklem and lingering trade and political tensions between the U.S. and Canada. Instead, the currency found support from a modest improvement in domestic economic data and optimism over potential trade deals with other global partners.
On Wednesday, U.S. Weekly Crude Oil Inventories showed a larger-than-expected drawdown, according to official data. This, along with a pullback in the U.S. Dollar, helped West Texas Intermediate (WTI) crude oil rebound from its weekly low. However, prices retreated early Thursday as markets turned cautious, driven by concerns over weaker energy demand and expectations from the U.S. Energy Information Administration (EIA) that oil demand will soften in both 2025 and 2026.
Additional pressure on oil prices came from rising U.S. production and renewed fears that Russia could return to global oil markets, amid speculation about possible progress in Ukraine-Russia peace talks.
Meanwhile, gold prices rose for two consecutive days, reaching a two-week high and breaking above a descending resistance line from the past month, now acting as support near $2,378. However, the precious metal edged lower early Thursday as markets entered a consolidation phase ahead of key U.S. economic data and in the absence of fresh catalysts.
Cryptocurrencies gained traction on Thursday, reversing the previous day’s losses as the market responded to pro-industry news and signs of stabilization in institutional demand following last week’s outflows. Despite the recovery, major tokens remain on track for a weekly decline. Technical setups are also supporting the latest rebound, particularly in Bitcoin (BTC) and Ethereum (ETH), helping bolster short-term bullish sentiment.
A series of August sentiment reports from the Eurozone — including the closely watched Consumer Confidence data — will be released ahead of Thursday’s key U.S. economic indicators: the second estimate of second-quarter Gross Domestic Product (GDP), weekly jobless claims, and the Core Personal Consumption Expenditures (PCE) Price Index. These releases are expected to keep traders actively engaged.
In addition, market participants will closely watch speeches from several second-tier Federal Reserve officials, as well as any developments related to Russia, U.S. trade tariffs, and concerns about the Federal Reserve’s independence. After-market earnings results from Dell Technologies are also on the radar and could influence broader sentiment.
If the upcoming U.S. data mirrors Tuesday’s stronger-than-expected reports, expectations for additional Federal Reserve rate cuts beyond the likely September move could diminish. This scenario would likely support the U.S. Dollar, pressuring the EUR/USD pair and risk-sensitive assets such as equities, commodities, and cryptocurrencies.
Conversely, weaker-than-expected data — combined with former President Donald Trump’s continued push for rate cuts and a lack of fresh risk-off headlines — could weigh on the Dollar and help these assets recover some of their weekly losses.
May the trading luck be with you!
