The market sees limited momentum early Thursday due to Labor Day holidays in Europe and China. Traders are caught between concerns over US trade deals with major economies and the potential growth risks from the ongoing tariff war.
The US Dollar Index (DXY) strengthens, ignoring soft US Q1 GDP, ADP Employment numbers, and a modest Core PCE Price Index—the Fed’s preferred inflation measure. The dollar gains support from positive news regarding US-Ukraine mineral deals and fewer obstacles to Trump’s trade policies in the Senate. However, despite this rebound, the DXY has fallen over the past three months due to growing fears that US trade policies could push the US and global economies toward recession.
The US Dollar’s latest rebound puts pressure on both EURUSD and GBPUSD, while USDJPY prints a three-day uptrend following the Bank of Japan’s cautious decision to hold rates steady. Meanwhile, AUDUSD and NZDUSD remain defensive after ending April on a positive note, while USDCAD is under pressure due to the latest optimism surrounding US-Canada relations, spurred by Mark Carney’s election as Canada’s national leader. Elsewhere, Gold fluctuates near its lowest level in two weeks, Crude Oil continues a four-day downtrend, and cryptocurrencies manage to recover some previous losses with mild intraday gains.
Both EURUSD and GBPUSD face a third consecutive day of losses, pressured by the strong US Dollar. While EU data remains mixed, the market grapples with growing tension in US-EU trade negotiations. Meanwhile, GBPUSD ignores a notable improvement in the latest Institute of Directors (IoD) survey, citing the biggest jump in business confidence since September 2023.
USDJPY surges, marking its biggest daily gain in over a week, supported by a stronger US Dollar and the Bank of Japan’s decision to keep rates unchanged. The BoJ lowered its 2025-2026 growth forecasts, citing concerns over US trade policies and their impact on Japan’s economy. Trade talks between Washington and Tokyo remain at a standstill due to tariff issues and currency policies.
Despite a firmer US Dollar, commodity-linked currencies like the Australian, New Zealand, and Canadian Dollars—often called the Antipodeans—remain uncertain early Thursday, following a positive monthly performance. AUDUSD stays mostly sidelined as Australia's trade surplus and optimism around China’s stimulus compete with softer PMI data. Similarly, NZDUSD lacks direction with no major data or events, despite a strong daily and monthly close. Meanwhile, USDCAD is under pressure, even after weak Canadian GDP data, as President Trump shows optimism about US-Canada relations under Mark Carney's leadership. Hawkish details from the latest Bank of Canada Minutes also weigh on USDCAD, despite weaker prices for Canada's key export, crude oil.
Gold extends its losses for a third day, hitting the lowest level in two weeks as a stronger US Dollar and month-end consolidation weigh on prices. The precious metal also faces mixed concerns about China’s demand and global consumption, according to the WGC. Meanwhile, WTI Crude Oil drops for the fourth straight day, despite a surprise draw in US inventories. The continued weakness in oil prices is likely driven by demand fears from the ongoing US tariff war and the OPEC+ output increase.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) break their two-day losing streak, posting modest gains early Thursday. The cryptocurrencies rise despite a stronger US Dollar, driven by industry optimism, technical breakouts, and positive ETF inflows.
With holidays in major European markets and a light data calendar from the US, UK, and Canada, markets are set for a quiet Thursday. Still, UK PMIs, US ISM Manufacturing PMI, Jobless Claims, and Canada’s S&P Global Manufacturing PMI may offer some intraday movement.
Broader focus remains on growth concerns stemming from US trade policies and ongoing geopolitical tensions in Ukraine and the Middle East. The US Dollar may see a gradual rise, while Antipodeans and cryptocurrencies could attempt a rebound. EUR, GBP, and JPY may remain rangebound, Gold could stabilize, but crude oil has limited support.
May the trading luck be with you!
