Trade optimism around China and Europe joined mixed FOMC Minutes to help support risk-takers. Still, US President Trump’s push to abolish the IRS, Pentagon budget cuts, and comments on Ukrainian President Zelensky sparked risk aversion. Meanwhile, Putin’s positive stance on Ukraine talks clashed with hawkish Fed officials to shake the market sentiment.
Amid these plays, the US Dollar Index (DXY) saw a three-day winning streak before retreating early Thursday, giving EURUSD and GBPUSD sellers a chance, while USDJPY hit a 10-week low. AUDUSD and NZDUSD benefited from easing trade tensions between the US and China, along with domestic support. USDCAD lacked momentum despite a three-day winning streak and rising crude oil prices, which eased slightly of late.
Gold reached a new all-time high near $2,949, while crude oil saw mild losses after rising for three consecutive days. Moving on, BTCUSD and ETHUSD remained in recovery, and equities pared recent gains.
A pause in the US Dollar’s rise and hopes for an EU-US trade deal helped EURUSD end its three-day losing streak, but recovery remains weak due to a dovish ECB stance. Concerns over the Ukraine-Russia peace talks, economic worries in Germany, and caution ahead of February’s EU/US PMI data also limit the Euro's rebound.
The US Dollar’s pullback helped GBPUSD gain for the first time in three days, despite dovish comments from BoE Governor Bailey and unimpressive UK employment and inflation data. However, concerns over a UK trade rift and anxiety ahead of the UK Retail Sales and PMIs limit gains of the Pound.
USDJPY leads G10 currencies, boosted by hopes that Japan may be exempt from US steel tariffs. Positive comments from the BoJ and government, along with strong Japanese 10-year bond yields (JGBs), also support the Yen.
Expectations of a successful US-China trade dialogue are supporting commodity-linked currencies like the Australian, New Zealand, and Canadian Dollars. AUDUSD gets a boost from positive comments by RBA Deputy Governor Hauser and mixed Aussie Jobs data, while NZDUSD edges higher as RBNZ Governor Orr rules out further 0.50% rate cuts.
Meanwhile, USDCAD struggles to recover from its first daily loss in three, as the US-Canada trade tensions persist. The dovish Bank of Canada's stance and concerns over Canada’s economic outlook are weighing on the Canadian Dollar, despite crude oil preparing for a weekly gain, even with today's pullback.
Gold prices hit a new all-time high near $2,949, driven by its safe-haven appeal and rising demand from China and India, along with expectations of continued challenges for the Fed's hawkish stance.
On the other hand, Trump’s push to quickly increase the Strategic Petroleum Reserve clashes with a larger-than-expected build in the private crude oil inventories, putting pressure on oil buyers after a three-day winning streak.
Bitcoin (BTCUSD) and Ethereum (ETHUSD) are recovering to reduce weekly losses, fueled by cautious optimism in the market. This comes alongside news that the US Securities and Exchange Commission (SEC) is stepping back from efforts to overturn a court ruling that blocked a controversial broker-dealer rule, which would have given the agency control over decentralized crypto protocols, according to CoinTelegraph.
Looking ahead, key data on Thursday includes Eurozone Consumer Confidence for February, US Weekly Jobless Claims, and the Philadelphia Fed Manufacturing Survey. However, most focus will be on updates from the Trump administration, trade news, and Russia-Ukraine developments, ahead of Friday’s preliminary February PMIs from major economies like the US, Eurozone, and UK.
The current market shift is likely to help the US Dollar end the week on a positive note, while Gold prices aim for a new high above $3,000. EURUSD, GBPUSD, and Antipodean currencies may face further losses, and Crude Oil and cryptos could pare their weekly gains. That said, USDJPY could keep its place on the seller’s radar.
May the trading luck be with you!
