On his third day as US President, Trump took to X (formerly Twitter) to reaffirm his tough stance on trade tariffs and global issues while pushing for more infrastructure investment. Meanwhile, China’s focus on boosting liquidity, and Saudi Arabia announced a $600 billion investment plan in the US, test the market's risk-off mood. However, a lack of major data allowed the US Dollar to recover early losses, putting pressure on buyers of major currencies, commodities, and Antipodean currencies.
That said, mostly dovish comments from European Central Bank (ECB) officials pulled EURUSD back from a three-week high, while GBPUSD also fell as the US Dollar rebounded from its weekly low. Further, USDJPY ended a two-day losing streak but lacked further momentum.
Gold surged to a 12-week high before buyers paused while Crude oil posted a six-day losing streak, supporting USDCAD’s three-day uptrend. However, AUDUSD and NZDUSD have been lacking momentum.
Meanwhile, equities dropped, and cryptocurrencies stayed under pressure after ending a two-day winning streak.
Several ECB policymakers, including President Christine Lagarde, supported lower rates while highlighting data dependence. This, along with concerns over US tariffs on the Eurozone and geopolitical tensions, pulled EURUSD from a three-week high, despite weak US Leading Indicators for December.
GBPUSD followed the USD’s rebound, marking its first daily loss in three days before quiet movements today.
USDJPY was pressured by strong Japanese trade data and expectations of a hawkish Bank of Japan (BoJ). However, market consolidation ahead of Friday’s BoJ rate hike and a stronger US Dollar challenged sellers.
The US Dollar’s strength and a risk-off mood weighed on AUDUSD and NZDUSD buyers, while softer Crude Oil boosted USDCAD. However, news of China’s stimulus helped support the Australian, New Zealand, and Canadian Dollars.
Gold surged to its highest since October 31, driven by China’s stimulus news and concerns over trade wars and geopolitical tensions. Despite a stronger US Dollar and mixed market sentiment, gold buyers remained focused on the rally even as prices dwindle ahead of Thursday’s European session.
A surprise build in US crude oil inventories, according to the API, along with Trump’s push for more drilling, pushed WTI Crude Oil to its lowest in two weeks, marking a sixth straight day of losses. A stronger US Dollar and concerns over slower energy demand from China also pressured energy prices.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) remain under pressure after ending a two-day winning streak. They ignored the CME’s plans to list more crypto futures and strong ETF fund inflows.
With a light economic calendar, traders will focus on key risk factors like news from Trump, China, and the Middle East. US jobless claims, Eurozone Consumer Confidence, and Canada Retail Sales will also attract attention. The US Dollar is expected to maintain its recovery amid sour sentiment, hawkish Fed views, and strong US data. This could weigh on EURUSD, while Gold prices may stay firm. GBPUSD is likely to stay under pressure, but USDJPY could attract sellers due to hawkish BoJ actions. Crude oil and Antipodeans may keep bears on alert, while cryptocurrencies and equities need a boost to regain upward momentum.
May the trading luck be with you!
