Markets saw heavy volatility on Thursday as mixed news on the Ukraine-Russia ceasefire and trade war fears shook investors, which hurt riskier assets. Despite weak US PPI data and unimpressive jobless claims, the US Dollar Index (DXY) gained for a third straight day, leading to a stronger dollar that weighed on EURUSD and GBPUSD but boosted USDJPY. However, gold, acting as a haven, ignored the stronger dollar and surged to a new all-time high, nearing the $3,000 mark.
Elsewhere, Antipodean currencies are showing caution, despite expected weekly losses, as optimism around China on Friday helped support the Australian, New Zealand, and Canadian dollars due to their trade ties with Beijing. Further, Cryptocurrencies remain under pressure despite Bitcoin’s (BTCUSD) corrective bounce as waning investor interest joins a broad risk-off mood. Meanwhile, equities brace for slight weekly gains whereas bond markets remain in jeopardy.
Key developments included Trump’s threat to impose 200% tariffs on European wine, champagne, and alcohol if the EU retaliates with tariffs on US whiskey over earlier steel and aluminum duties.
Russia’s softer stance on a Ukraine ceasefire and US optimism also grabbed attention, though less positive headlines from Kyiv and Europe tempered the outlook.
In the US, policymakers worked to pass a temporary funding bill to keep the government running until September 2025.
Meanwhile, Canada and Mexico navigated unclear responses to US tariffs. US Treasury Secretary Scott Basent indicated readiness to tackle inflation and interest rates, dismissing recession fears. However, Jeff Gundlach, CIO of DoubleLine, predicted a 60% chance of a US recession in 2025 and forecasted gold hitting $4,000.
EURUSD fell for the third straight day, while GBPUSD remained under pressure after reversing from a four-month high. USDJPY continued its rebound, extending gains from its lowest point since October 2024. Both EURUSD and GBPUSD are set for weekly losses, while USDJPY looks poised for a positive close, supported by a stronger US Dollar, despite domestic positive catalysts.
Eurozone industrial production and optimism about Germany couldn't prevent EURUSD from dropping, especially with ECB policymakers warning of a potential recession in Germany if the US trade war worsens. UK data was mostly positive but couldn't support GBPUSD, as trade talks with the US remain stalled, and both the UK government and the Bank of England face market skepticism. Meanwhile, the hawkish tones of the Bank of Japan (BoJ) officials didn't weigh on USDJPY, as mixed reports about Japan's intervention and deflation status, along with stalled Tokyo-Washington trade talks, kept the pair supported.
Chinese stocks rose on Friday, temporarily easing the Australian, New Zealand, and Canadian Dollars. However, they are still on track for weekly losses due to global risk aversion and a stronger US Dollar. Canada’s weak oil prices, the dovish Bank of Canada outlook, and trade tensions with the US push the USDCAD higher. Additionally, New Zealand's Food Price Index fell in February, while its Manufacturing PMI improved.
Crude oil is set for its eighth straight weekly loss as the International Energy Agency (IEA) lowers its 2025 demand forecast, even as OPEC+ expects steady demand. Increased supply from the US and OPEC+ and a stronger US Dollar are putting further pressure on oil prices, alongside mixed news from the Middle East.
Amid trade war tensions, uncertainty over the Ukraine-Russia ceasefire, and geopolitical issues in the Middle East, Europe, and Canada, traders are turning to Gold as a haven. This is especially true as easing inflation challenges the Fed’s hawkish stance, and concerns about a US recession from Trump's trade policies add support to Gold (XAUUSD) approaching an 11-month trend line resistance near the $3,000 mark. Additionally, global central bank uncertainty boosts Gold prices, despite occasional pullbacks due to issues in China.
Despite positive news on Stablecoin regulations and Binance and Ripple's Dubai venture giving temporary relief to Bitcoin (BTCUSD) and Ethereum (ETHUSD) sellers, the bearish trend continues. Traders are still discouraged by Trump’s Bitcoin reserve policy, ETF outflows, lower institutional optimism, and low trading volume. Against this backdrop, BTCUSD sees mild daily gains and is on track for its first weekly gain in three weeks, while ETHUSD is heading for its third weekly loss despite recent intraday gains.
Looking ahead, key reports to watch include the University of Michigan’s Consumer Sentiment Index and Consumer Inflation Expectations for March, Canada’s Manufacturing and Wholesale Sales, and the UK’s NIESR GDP Estimate for February.
Softer US data could challenge the USD’s recent rebound, but overall risk aversion, easing concerns of the US government shutdown, and less focus on a US recession may help the Greenback close the week positively. This could put pressure on Gold near the $3,000 resistance, while major currencies, Antipodeans, and cryptos may extend their weekly moves.
May the trading luck be with you!
