Markets are uncertain early Friday, despite positive data from China on Retail Sales and GDP growth. News of a ceasefire deal between Israel and Hamas, along with weaker US Retail Sales and higher Jobless Claims, add to the mixed sentiment. However, hawkish comments from the Fed, rising trade war concerns, and a cautious mood ahead of Donald Trump’s inauguration on Monday may dampen optimism in the face of a quiet calendar ahead. It should be observed that the World Bank highlighted global economic headwinds from trade policy changes, geopolitical tensions, climate change, and inflation, while maintaining growth forecasts at 2.7% for 2025 and 2026.
Amid these plays, the US Dollar Index (DXY) is at a weekly low after a four-day losing streak, while Gold hovers near a key resistance level, heading for a third straight weekly gain. Further, EURUSD and GBPUSD benefit from a weaker US Dollar, aiming for weekly gains, though momentum is limited, whereas USDJPY looks set for its biggest weekly loss in seven weeks. Additionally, AUDUSD and NZDUSD remain strong, while USDCAD struggles to recover previous weekly losses. Finally, Crude Oil and cryptocurrencies are set for weekly gains, despite a dip on the previous day, while equities drift lower.
Despite US data and a cautious mood weighing on the US Dollar, EURUSD and GBPUSD struggle to hold gains due to weak economic signals from Europe and the UK. Concerns about German stagflation, political instability in the Eurozone, and mixed ECB comments are limiting EURUSD's recovery. Meanwhile, downbeat UK data and doubts about the new British government's economic stability are weighing on GBPUSD.
In contrast, USDJPY is poised for its biggest weekly loss in seven weeks, as new Japanese data raises expectations for a Bank of Japan rate hike. Additionally, concerns about the Japanese government stepping in to protect the yen could further impact the pair.
The softer US Dollar helps AUDUSD and NZDUSD stay stronger, while putting pressure on USDCAD. However, these commodity-linked currencies struggle to hold gains against the Greenback. Doubts about recent strong China data and dovish expectations from their central banks are taking center stage.
Gold pauses near the key $2,710-20 resistance, but is set for a third straight weekly gain. Buyers focus on mixed US data, a softer Dollar, stronger China statistics, and mixed risk news ahead of Trump’s inauguration on Monday.
Gaza ceasefire deal triggered the US Crude Oil’s biggest daily fall in two months the previous day. However, softer US Dollar and China macros allowed the black gold to rebound afterward, bracing for a weekly gain.
Elsewhere, Bitcoin (BTCUSD) and Ethereum (ETHUSD) also eye weekly uptrend despite trimming gains the previous day. In doing so, the key cryptocurrencies justify updates from the Trump administration stating that they plan to make cryptocurrency a “National Priority” policy upon Donald Trump’s inauguration.
After recent volatility, financial markets are expected to be quieter ahead of Monday’s US holiday and Trump’s inauguration. A light economic calendar may limit momentum, though traders could focus on revised Eurozone inflation data and US housing and industrial production figures. The US Dollar's recovery seems unlikely, which could help Gold break key resistance. Meanwhile, major currencies and Antipodeans may continue their weekly trends, while cryptocurrencies and equities might lack momentum.
May the trading luck be with you!
