Market sentiment improves as tensions ease between Trump and Elon Musk, Trump’s positive call with China’s Xi, and no major escalations from Iran or Russia. However, weak US job data and doubts over Trump’s “Big, Beautiful Bill” keep investors cautious ahead of key US and Canadian job reports.
In Asia, Japan’s struggle to defend the BoJ’s hawkish stance—amid weak bond demand and mixed data—adds to EU-US and EU-China trade tensions. Slight progress in Japan-US trade talks offers some relief. Meanwhile, the ECB cut rates by 0.25% but kept a hawkish tone.
With the US Dollar Index at a six-week low, Gold holds weekly gains. Major currencies remain choppy, oil prices pull back, and cryptocurrencies stabilize after recent losses. Stocks inch up, but high bond yields weigh on risk sentiment ahead of the data.
The ECB delivered a 0.25% rate cut as expected, but its statement and President Lagarde’s comments signaled a likely pause in July. This, combined with a weaker US Dollar, pushed EURUSD to its highest level since April 22, though cautious market sentiment limited further gains early Friday.
GBPUSD climbed to its highest since February 2022, supported by a confirmed “Cup and Handle” bullish chart pattern and optimism over US-UK trade talks. Hawkish remarks from BoE officials added to the momentum, even as recent UK PMI data failed to support the BoE’s positive outlook fully.
Meanwhile, USDJPY extended gains for a second day. Concerns over the BoJ’s rate hike—amid weak demand for Japan’s 30-year bonds and mixed economic data—pressured the yen. Mixed signals on US-Japan trade talks, despite signs of progress, and a generally upbeat market mood also helped the pair recover.
Early Friday, AUDUSD pulls back from its highest since November 2024, NZDUSD wavers near October highs, and USDCAD remains under pressure near an eight-month low. Commodity currencies stay supported by a weaker US Dollar, optimism over US trade deals, and China’s stimulus.
However, concerns over Iran’s potential oil exports—if a US-Iran nuclear deal is reached—and OPEC+ plans to boost output weigh on energy markets. This pressure, along with dovish tones from the RBA, RBNZ, and BoC, limits further gains in the Aussie, Kiwi, and Loonie.
Meanwhile, the BoC’s recent decision to pause rate cuts and pre-NFP/Canadian jobs data cautions a slow USDCAD’s decline.
Gold pulled back from a four-week high and closed lower on Thursday, but is still set for a strong weekly gain. The metal is supported by a weaker US Dollar, uncertainty over US trade deals, Trump’s tax bill, and geopolitical tensions involving Iran, Gaza, Ukraine, and China.
Rising demand from China and India also boosts prices, especially as bond yields climb, US data weakens, and investors seek safe-haven assets during uncertain times.
WTI Crude Oil wavers after Thursday’s rebound as markets turn cautious ahead of the key US jobs report. Weighing on oil prices are concerns over higher OPEC+ output, Trump’s “Drill Baby Drill” push, and potential supply from Iran if a nuclear deal is reached. Still, falling US inventories and a weaker Dollar continue to offer support to oil bulls.
Tensions between Trump and Musk, along with a slowdown in crypto ETF inflows, triggered a sharp sell-off in Bitcoin (BTCUSD) and Ethereum (ETHUSD) on Thursday. Growing interest in altcoins with strong fundamentals also added pressure as investors explore new opportunities. It’s worth noting that Ethereum posted its biggest daily drop in two months, while Bitcoin saw its steepest fall in two weeks the previous day.
Friday’s economic calendar is packed with key data, including Eurozone Q1 GDP, unemployment, monthly retail sales, and May’s jobs reports from the US and Canada. ECB President Lagarde’s speech will also be closely watched.
So far, early signals for the US NFP have been weak. If confirmed, this could further pressure the US Dollar, boosting major currencies, Gold, and crude oil. However, risk-off sentiment and any USD-positive news, like progress on Trump’s tax bill, may help the Dollar recover and limit gains elsewhere.
The Euro remains vulnerable to mixed ECB signals and data, while USDCAD may fall further if oil stays strong and Canada’s jobs data meets upbeat expectations.
May the trading luck be with you!
