Early signs of renewed US-China trade talks lifted market sentiment on Friday, helping risk assets recover and easing pressure on the US Dollar. Despite weak global data and ongoing Ukraine-Russia tensions, hopes for softer US tariffs and more Fed rate cuts added fuel to the optimism.
Beijing confirmed Washington’s outreach for trade talks, boosting hopes of progress, though China’s demand for a full tariff rollback may reignite tensions. Still, with Chinese holidays and potential negotiations on the table, the mood remains cautiously upbeat.
In response, the US Dollar Index (DXY) snaps a three-day winning streak, allowing Gold to rebound from the 21-SMA to print the first daily gain, so far, in four. That said, EURUSD recovers from a three-week low while GBPUSD prods a three-day downtrend. Further, USDJPY retreats from April highs, snapping a three-day uptrend.
AUDUSD braces for the fourth weekly gain, but the NZDUSD remains downbeat on the week despite posting an intraday run-up. Meanwhile, USDCAD remains under pressure on softer USD and firmer crude oil, Canada’s key export, whereas cryptocurrencies post mild gains near the multi-week tops and equities also inch higher.
Following Beijing's conditional offer to resume talks, a shift in sentiment toward a possible US-China trade deal boosted market optimism as European traders returned from holiday. Despite weak EU and UK data, both EURUSD and GBPUSD posted their first daily gains in four sessions, signaling a potential short-term pullback.
USDJPY also eased from a three-week high, ending a three-day rally. The pair faces pressure as Japan demands a full rollback of US tariffs, mirroring China’s stance. A surprise rise in Japan’s unemployment rate and the Bank of Japan’s cautious outlook add to the mixed tone, even as the US Dollar weakens.
A softer US Dollar and renewed optimism around China boosted commodity-linked currencies. The Aussie, Kiwi, and Loonie all posted intraday gains, with AUDUSD eyeing a four-week rally and NZDUSD trimming weekly losses. USDCAD stayed under pressure, helped by a rebound in oil prices. Mixed Australian data, strong NZ building permits, and hopes for a US-Canada trade deal also supported sentiment surrounding these currencies.
Gold edged higher early Friday, snapping a three-day losing streak, supported by softening US Dollar, firm global demand, and growing rate cut expectations. However, caution ahead of the US April jobs report and “Sell in May” fears keep gains in check, with the metal still on track for a second straight weekly loss.
Crude oil climbed as hopes around China’s recovery lifted sentiment, further boosted by Saudi Arabia’s rejection of claims it’s comfortable with lower prices. In crypto, strong on-chain metrics and reports that major US banks may soon offer trading services added to the bullish mood. With this, Bitcoin (BTCUSD) prints mild gains near the highest level since late February, whereas Ethereum (ETHUSD) seesaws around a month’s high.
Markets brace for a busy session as European traders return from holiday, with EU inflation data and the US April jobs report taking center stage. Ongoing concerns over US-China trade talks, Ukraine-Russia tensions, and US-Iran negotiations could also stir volatility. Weekend elections in Australia and upcoming US Factory Orders add to the watchlist.
Early signs point to a softer US Nonfarm Payrolls (NFP) print, which may pressure the US Dollar. However, steady unemployment and solid wage growth could limit the downside. This backdrop may support EUR, GBP, and JPY recoveries, while gold could struggle without stronger catalysts. Meanwhile, oil, crypto, and commodity currencies may edge higher, but equity markets could remain choppy amid mixed global signals.
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