Market sentiment is mixed on Friday after a volatile Thursday, with traders waiting for key US job data and a speech from Fed Chair Jerome Powell. Additional job reports from the Eurozone and Canada, the EU Q4 GDP, and comments from ECB President Lagarde will add to market activity, keeping traders cautious.
Weaker US jobless claims, a shrinking trade deficit, and the ECB’s dovish rate cut couldn’t prevent a drop in the US Dollar. Rising US job cuts, fears of economic slowdown, and mixed tariff news put pressure on the Greenback. Early Friday, concerns about weak US job data, easing tariff issues, and growing tensions with Iran and China weighed on the USD.
As a result, the US Dollar Index (DXY) is on a five-day losing streak, heading for its biggest weekly drop since November 2022. This benefits major currencies, gold, and the Aussie and Kiwi dollars, while crude oil and cryptocurrencies remain under pressure, and stocks are edging higher.
Despite ECB President Lagarde's concerns about the economy, which challenged EURUSD bulls at a four-month high, the pair looks set to achieve its biggest weekly gain since November 2022. This rise is likely due to a weaker US Dollar, growing optimism about Germany’s economy, and easing concerns over EU-US trade relations.
Similarly, GBPUSD is recovering, continuing its upward trend and heading for a strong weekly gain, even as Bank of England member Catherine Mann pushed for earlier rate cuts and challenged Pound Sterling buyers the previous day.
Meanwhile, USDJPY is on a three-day losing streak, hitting a five-month low. Japan’s move to end long-term deflation, along with comments from Japan's Finance Minister Kato and the Yen’s safe-haven appeal, is putting pressure on the pair.
Irrespective of fresh concerns over US-China trade and political tensions, the Australian, New Zealand, and Canadian Dollars are set for weekly gains against a weaker US Dollar. These gains are supported by easing tariff fears, worries about softer US employment data, and slowing growth. However, falling crude oil prices, driven by an OPEC+ supply increase, limit gains for the Canadian Dollar, as oil is Canada’s main export.
Gold struggles to regain momentum after ending a three-day winning streak, as traders await clear signs of easing US employment conditions and challenges to growth from tariff and political issues. Despite this, the precious metal is still on track for weekly gains, supported by its safe-haven status and a weaker US Dollar.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) are set for weekly losses despite a weaker US Dollar and US President Trump's executive order to create a Strategic Bitcoin Reserve. The losses may stem from concerns over the details of Trump’s plan, which suggests Bitcoin as the US digital asset stockpile, and a cautious mood ahead of the White House Crypto Summit starting Friday.
Today promises an active day with key data and events, including US, Canadian, and Eurozone employment reports, EU Q4 GDP, and speeches from Fed Chair Jerome Powell and ECB President Lagarde. In addition, headlines about US tariffs and political tensions with Iran, Canada, Mexico, Ukraine, and China will keep momentum traders busy.
Early signs point to a weak US employment report, which could weigh on the US Dollar and boost other major currencies and commodities. However, Powell’s dismissal of recent growth concerns and his hawkish stance may support the Dollar, potentially challenging Gold buyers who have struggled for momentum. EURUSD might trim some of its weekly gains if Lagarde echoes yesterday’s economic concerns, while GBPUSD could follow suit. USDJPY may stay under pressure due to the Bank of Japan’s hawkish bias. Meanwhile, the Antipodean currencies will depend on US data for clear direction but may not add much to the weekly moves. Crude oil and cryptocurrencies could remain under pressure.
May the trading luck be with you!
