US President Donald Trump’s press conference touched on various issues, from trade tariffs to US DOGE's government efficiency initiatives, and caused market jitters amid month-end consolidation. With this, traders largely ignored mixed US data, instead focusing on hawkish comments from Atlanta Fed President Raphael Bostic, which helps the US Dollar Index (DXY) rebound. The Dollar's recovery attracted sellers of EURUSD, GBPUSD, AUDUSD, and NZDUSD, with downbeat news from Europe, the UK, Australia, and New Zealand adding pressure. However, USDJPY stayed near a 19-week low but Crude Oil and Gold faced selling, boosting USDCAD and weighing on cryptocurrencies. Additionally, equities dipped, and bond markets remained cautious, especially outside Japan.
The release of the full text of the US-Ukraine deal failed to boost EURUSD buyers, as weak German sentiment data and Trump’s warning of 25% tariffs on European autos and goods weighed on the pair. The possibility of EU retaliation and the European Central Bank's (ECB) dovish outlook added further downside pressure, extending EURUSD's pullback from a one-month high.
Meanwhile, the Confederation of British Industry's (CBI) quarterly survey showed the fastest drop in services since August 2020. The same joined comments from Bank of England (BoE) official Swati Dhingra to cause GBPUSD to reverse from a 10-week high, ending its two-day winning streak.
The US Dollar's rebound has slowed the USDJPY pair's downtrend, allowing it to remain slightly bid for a second day at the lowest level since early October 2024. However, concerns about potential rate hikes from the Bank of Japan (BoJ), as mentioned by Japan’s Vice Finance Minister Atsushi Mimura, are challenging the pair's recovery. While fears of Japan's market intervention have eased after Mimura’s comments, BoJ hawks are focusing on market uncertainty, putting pressure on buying activity, especially ahead of the key Japan and US inflation data set for Thursday and Friday.
AUDUSD and NZDUSD have both dropped for the fifth consecutive day, while USDCAD is on a five-day winning streak early Thursday. The commodity-linked currencies from Australia, New Zealand, and Canada, known as the Antipodeans, largely ignore China's stimulus measures due to concerns over trade wars and geopolitical tensions between the US, China, and Asia-Pacific nations.
Australia’s weak Q3 private capital expenditure and cautious remarks from Reserve Bank of Australia Deputy Governor Andrew Hauser add downside pressure on AUDUSD. Meanwhile, NZDUSD follows AUDUSD despite positive New Zealand business confidence data. Further, USDCAD remains strong, reaching its highest level in over two weeks, supported by US-Canada tensions, weak Canadian data, a dovish Bank of Canada (BoC) outlook, and lower crude oil prices, a key export for Canada.
Market uncertainty hasn't sparked Gold buying, as month-end position adjustments, a stronger US Dollar, and technical factors push traders toward a seven-week-old rising support line near $2,900. This suggests that sellers may target the late 2024 peak around $2,790, driven by concerns over a potential pause in China's gold demand and a hawkish Fed. However, caution remains due to Gold's safe-haven appeal.
Crude Oil continues to struggle at its lowest point in 11 weeks, despite a surprise drop in US crude oil inventories and fears of a supply crunch from Iran amid US-Iran tensions. The pressure seems linked to concerns over higher supplies backed by Trump and reduced demand from key customers, along with an OPEC+ supply increase.
Broad risk-aversion, combined with the $1.5 trillion hack of Bybyte tokens, has dragged major cryptocurrencies down in recent days. That said, Bitcoin (BTCUSD) and Ethereum (ETHUSD) are recovering from multi-day lows after declining for four and three consecutive days, respectively, showing the market’s month-end consolidation at the time of writing.
While risk-related news helped the US Dollar rebound recently, Thursday’s economic calendar is packed with data and events that could keep momentum traders on edge. Key releases include Swiss Q4 GDP, Eurozone Consumer Confidence for February, and factors like US trade tariffs and geopolitical developments. Additionally, US Weekly Jobless Claims, revised Q4 GDP readings, January Durable Goods Orders, and Q4 Personal Consumption Expenditure (PCE) will be closely watched.
The month-end short-covering of the US Dollar could gain strength from the scheduled data points and a risk-off mood, putting further pressure on major currencies, Antipodeans, and commodities. However, the hawkish Bank of Japan (BoJ) bias and cautious sentiment ahead of Friday’s Japan inflation data and the US Core PCE Price Index, the Fed’s preferred inflation measure, may challenge the USDJPY rebound.
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