Markets remained uncertain early Wednesday following Wall Street's strong close and volatile trading in the Asia-Pacific region. NZDUSD rebounded as the Reserve Bank of New Zealand (RBNZ) cut rates, but Governor Hawkesby struck a hawkish tone, drawing major attention. That said, the Kiwi gains were later trimmed.
Risk sentiment is pressured by reassessment of Trump's EU tariff relief, concerns over US fiscal health due to proposed tax cuts, fading hopes for a US-Iran nuclear deal, stalled Ukraine-Russia ceasefire talks, and rising tensions in Gaza.
The US Dollar Index (DXY) extended its gains after strong US Durable Goods Orders and Consumer Confidence data, which weighed on major currencies and gold. Crude oil rebounded after two days of losses, ahead of US inventory data.
Caution prevails ahead of the FOMC Minutes, amid China's stimulus signals and warnings against US trade moves. Meanwhile, Bitcoin (BTCUSD) struggles after a three-day rally, and Ethereum (ETHUSD) posts its first loss in five days. Equities ease, and bond yields edge higher.
The US Dollar’s rebound, supported by cautious European Central Bank (ECB) comments, mixed German data, and the EU’s firm stance despite a US tariff delay, pressures EURUSD lower. The pair extends its pullback from a monthly high, falling for a second day.
GBPUSD also retreats from its highest level since February 2022, as confidence in the UK’s global trade prospects fades and the UK CBI sales data disappoints, dragging the pair toward the key 1.3450 resistance-turned-support.
Meanwhile, USDJPY rises for a third day, fueled by concerns over the Bank of Japan’s (BoJ) bond issuance plans and mixed signals from BoJ Governor Ueda and Finance Minister (FinMin) Kato. Ongoing US-Japan trade tensions further support the pair’s recovery from a monthly low.
AUDUSD extends its slide from the yearly high, falling for a third straight day despite stronger Australian inflation and signs of robust Chinese stimulus. The pair tracks the US Dollar rebound and mixed market sentiment.
Meanwhile, USDCAD also rises for a third day, shrugging off a crude oil recovery and optimism around Canada’s new leadership. Sentiment is further clouded by Trump’s controversial demand for Canada to pay $61 billion to join the US-led “Golden Dome” project—either as a partner or a new US state—challenging the positive outlook for US-Canada ties under PM Carney.
The RBNZ cut rates by 0.25% as expected, but a cautious tone from Governor Hawkesby and signs of policymaker hesitation on further cuts helped NZDUSD stabilize after two days of losses. Still, concerns over New Zealand’s economic outlook, a rebounding US Dollar, and Auckland’s trade deal struggles continue to weigh on the Kiwi pair.
Crude oil halts its two-day slide as fresh doubts over Iran’s ability to boost global supply and a pause in the Gaza war support prices. Markets also react to talk that Putin may be unable to end the war, with Russia’s economy now dependent on defense spending, raising fears of an eventual economic shock. Attention now turns to the US weekly inventory data.
Meanwhile, gold eases as traders await the FOMC Minutes, and the US Dollar strengthens on upbeat data. The return of US and UK traders after a long weekend adds pressure. Gold’s failure to break above the $3,365–$3,370 resistance zone also contributes to its pullback.
Bitcoin and Ethereum face pressure as the US Dollar strengthens and technical resistance levels cap gains. Industry news hinting at growing challenges for retail traders adds to the drag. With this, BTCUSD remains under pressure after ending a three-day winning streak, while ETHUSD posts its first loss in five days, retreating from a 3.5-month high.
After a strong return by US and UK traders on Tuesday, attention now shifts to the FOMC Minutes for fresh cues. If the Fed signals concern over inflation but avoids a hawkish stance, it could weaken the US Dollar and revive gains in major currencies, commodities, equities, and cryptocurrencies.
In addition to the FOMC Minutes, traders will watch mid-tier data from Germany, India, and the US crude oil inventory reports for intraday direction.
Broader market sentiment remains fragile, with renewed focus on the potential fallout from the US tax bill, ongoing trade tensions, and geopolitical risks in the Middle East and Ukraine—all of which could dent recent optimism and pressure the US Dollar.
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