Early Monday sees traders stepping back as fears over US-China trade talks and Ukraine ceasefire negotiations resurface. Global pushback against US policies and anticipation over US GDP, NFP, and central bank moves keep risk appetite in check.
That said, China's stimulus announcements and strong industrial profits ease some fears, but Trump’s criticism of Beijing and Russia’s hardline stance keep optimism in check. Caution also builds ahead of Canada’s elections, US GDP and jobs data, BoJ policy updates, and major releases from China and Australia.
The Fed’s semi-annual survey pointed to rising global trade risks, providing an extra boost to the US Dollar, especially as mixed US data and cautious signals from the Fed keep traders on edge.
The US Dollar Index (DXY) holds steady after its first weekly gain in five, while Gold stays pressured following a sharp pullback from record highs.
EURUSD tries to recover after ending a four-week rally, and GBPUSD gains, aiming for a fourth straight weekly rise. Further, USDJPY struggles to maintain last week’s rebound, while AUDUSD and NZDUSD show modest strength despite three weeks of gains.
Elsewhere, USDCAD wavers after its first weekly rise in eight, WTI crude extends its three-day uptrend, and BTCUSD and ETHUSD inch higher as equities post slight gains following Wall Street's recent strength.
The US Dollar struggles to extend its weekly gains, while mixed trade and political headlines from Europe and the UK allow EURUSD and GBPUSD to edge higher early Monday. That said, a lack of progress in US-Japan trade talks, combined with expectations that the BoJ will maintain its current policy, restrict USDJPY moves after snapping a three-week losing streak. Elsewhere, ECB officials appear defensive, while BoE policymakers highlight UK retail sales growth, despite concerns over the economic toll of US tariffs. Additionally, rumors about the Japanese government's preference for a stronger Yen add to USDJPY trader sentiment, especially amid the Japanese bank holiday.
Even if the US-China trade jitters prevail, stimulus measures from Beijing and strong industrial profits in China help the Australian and New Zealand Dollars maintain their gains after a three-week uptrend. However, a cautious market mood limits further upside for AUDUSD and NZDUSD.
With Canada’s general elections nearing and mixed updates on US-Canada trade relations, USDCAD lacks direction. With this, the USDCAD pair struggles to gain momentum after a two-day losing streak and the first weekly gain in eight.
Despite stronger crude oil prices, the Canadian Dollar (CAD) remains under pressure as traders await election results and key US data, including GDP and employment reports. It should be observed that Mark Carney, the frontrunner in the Canadian PM race, has softened his stance on the US, which could weigh on the CAD.
Despite the US Dollar lacking upward momentum, Gold falls for the third consecutive day amid month-end consolidation and news from China pointing to weaker consumption from one of the world’s top gold buyers.
In contrast, WTI Crude Oil rises for the third straight day, buoyed by mixed geopolitical news and concerns over energy demand, as the US appears ready to resolve trade issues with major economies. However, oil marked a weekly loss, weighed down by expectations of more OPEC+ supply and reduced global energy demand due to the US tariffs’ impact on global freight, along with a stronger Dollar.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) continue their upward momentum on Monday, boosted by the first weekly ETH ETF inflow since February, positive signals from the US SEC, and technical breakouts. In doing so, the cryptocurrencies remain focused on their bullish trend, largely ignoring global market anxiety ahead of key data and events this week.
Momentum traders will stay alert as Canadians vote in a snap election to select their Prime Minister. The market is also focused on preparations for this week’s key US data and events, as well as ongoing concerns about US trade relations, Ukraine-Russia ceasefire talks, and tensions between Israel and Iran.
Mark Carney’s potential selection as Canadian PM is seen as positive for US-Canada trade ties but less supportive for the Canadian Dollar (CAD), even though Carney’s leadership experience with the UK and Canadian central banks is notable. Risk-negative headlines may help the US Dollar recover some losses but won’t support Gold, keeping USDCAD biased upward, especially if Crude Oil weakens.
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