Markets stay dicey early Friday as traders reassess fresh U.S. Producer Price Index (PPI)-driven inflation fears. Sentiment was further pressured by concerns over a deal from the Donald Trump–Vladimir Putin meeting in Alaska, cautious remarks from Federal Reserve officials, and comments from U.S. Treasury Secretary Bassent. Adding to the mix were Trump’s optimism for a deal with Russia and the U.S. Government’s plan to take a stake in Intel. Furthermore, mostly downbeat Chinese data, upbeat Japanese growth figures, and speculation about no rate cut from the Reserve Bank of Australia (RBA), alongside a 0.25% cut from the Reserve Bank of New Zealand (RBNZ), also kept traders on edge.
Thursday’s PPI report showed July prices surging 0.9% month-on-month (MoM) and 3.3% year-on-year (YoY), far above the 0.2% MoM and 2.5% YoY forecasts, and well above prior readings of 0.0% and 2.4% respectively. Core PPI (excluding food and energy) also jumped 0.9% MoM and 3.7% YoY, versus expectations of 0.2% and 2.9%. These figures signaled stronger-than-expected inflation pressures, challenging market bets on near-term rate cuts. U.S. Initial Jobless Claims fell to 224K, beating forecasts of 228K and prior 227K.
Following the data, Richmond Fed President Thomas Barkin said that the business sentiment has picked up in some ways, but not in hiring. Meanwhile, St. Louis Fed President Alberto G. Musalem stated that the inflation is running about 3% above the 2% target, and adding, “Tariffs are impacting”.
Treasury Secretary Bassent expressed doubt over a ceasefire deal with Russia and revealed that confiscated Bitcoin will form the Strategic Bitcoin Reserve under President Trump’s March executive order. He clarified the U.S. will not purchase Bitcoin but will rely on seized assets, weighing on cryptocurrency sentiment.
Ahead of his Alaska trip, Trump said he wants a deal with Russia and believes Putin will agree, citing potential economic incentives and penalties.
In Asia, China’s Industrial Production rose 5.7% Year-on-Year (YoY) in July, the weakest growth since November 2024, versus June’s 6.8%. Further, Retail Sales growth also eased to 3.7% YoY during the said month from 4.8% prior. Both these figures trailed market forecasts. Additionally, the House Price Index improved, but the Year-To-Date (YTD) Fixed Asset Investment for July flashed the lowest growth since January 2021. The latest statistics raised economic fears surrounding China, by flagging a challenge for the dragon nation to sustain growth amid weak domestic demand and global headwinds.
Further, Japan’s preliminary readings of the second-quarter (Q2) Gross Domestic Product (GDP) beat expectations with 0.3% QoQ figures versus 0.1% expected, 0.0% prior, marking the fifth consecutive quarter of GDP increase.
New Zealand’s Food Price Index eased, but the July manufacturing PMI rose to 52.8, up from the prior 48.8. Elsewhere, talks about a pause in the RBA’s rate cut trajectory also gained momentum, especially after the strong employment and wage data, whereas the RBNZ is expected to cut the benchmark rates by 0.25% next week.
Against this backdrop, the US Dollar Index (DXY) stalled its two-day winning streak with the biggest daily jump in a fortnight on Thursday, before retreating early Friday. This pushed the Gold prices to print the first daily loss in three and brace for the weekly loss despite today’s corrective bounce. Major currencies like EURUSD and GBPUSD also eased before today’s rebound, while USDJPY marked a volatile day as it bounced off a three-week low but reversed the gains with notable losses on Friday. Further, AUDUSD, NZDUSD, and USDCAD lick their wounds while crude oil fades the previous day’s corrective bounce from a two-month low.
Cryptocurrencies stall after a pullback from the multi-month high, chasing the dicey markets, whereas equities closed mixed, but S&P ended Thursday at a record closing.
EURUSD trims its biggest daily loss in two weeks, while GBPUSD reverses the prior day’s pullback from a six-week high. USDJPY draws more attention as it posts the sharpest drop among G10 currencies, erasing the previous day’s rebound from a three-week low.
EURUSD and GBPUSD face limited fresh catalysts, whereas USDJPY reacts to stronger-than-expected Japan Q2 GDP and Economy Minister Ryosei Akazawa’s praise of the country’s growth. Japan’s Finance Minister Katsunobu Kato reiterated that monetary policy is the Bank of Japan’s responsibility and dismissed speculation that U.S. Treasury Secretary Bassent urged a rate cut, clarifying that Bassent only noted the BoJ may raise rates as it lags on inflation.
China’s weak data and rising geopolitical tensions pressured commodity-linked currencies, including the Australian, New Zealand, and Canadian Dollars. AUDUSD stays under weekly pressure despite recent calls for no further Reserve Bank of Australia (RBA) rate cuts following this week’s reduction. NZDUSD remains weighed by expectations of a Reserve Bank of New Zealand (RBNZ) rate cut, despite mixed readings in the Food Price Index and Manufacturing PMI.
USDCAD holds firm as falling crude oil prices — Canada’s key export — combine with U.S.-Canada trade tensions and a dovish Bank of Canada (BoC) outlook. This comes even as the BoC’s latest meeting minutes signaled a “wait and see” policy stance.
Thursday’s U.S. Dollar rebound and fading market optimism dragged spot gold (XAU) lower, threatening to end its two-day winning streak. Early Friday, momentum shifted as the Dollar retreated and traders sought the safe-haven metal amid uncertainty over China’s economic outlook, the Russia–Ukraine trade deal, and the Federal Reserve’s next move following mixed consumer data. Still, gold remains on track for a weekly loss, with recent investment flows favoring equities and cryptocurrencies over bullion, while weaker demand from China — one of the world’s largest gold buyers — adds further pressure.
Crude oil prices fell as fears of increased Russian supply after a Ukraine–Russia ceasefire combined with weaker energy demand from U.S. tariffs, higher OPEC+ output, and President Trump’s push for more drilling. The decline reversed Thursday’s corrective bounce from a two-month low, putting oil on track for a weekly loss.
Bitcoin (BTC) remains under pressure after Thursday’s nearly 4% drop from record highs, setting up for a weekly loss. In contrast, Ethereum (ETH) holds a stronger tone, still eyeing a weekly gain despite a 4% pullback from its highest level since December 2021.
Looking ahead, U.S. Retail Sales for July, the University of Michigan’s (UoM) Consumer Sentiment and Inflation Expectations for August, and the Empire State Manufacturing Index will headline Friday’s calendar.
If these figures echo Thursday’s upbeat data, the U.S. Dollar may extend gains, pressuring gold and other risk assets. This could also reinforce a hawkish market bias ahead of next week’s Jackson Hole Symposium, where global central bankers, including Federal Reserve Chair Jerome Powell, are set to speak.
On the geopolitical front, a positive outcome from the Trump–Putin meeting could push crude oil lower and lift riskier assets such as equities and cryptocurrencies. While the effect on the Dollar remains uncertain, an unexpectedly strong result might help gold pause its decline, though such an outcome appears unlikely at this stage.
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