Risk sentiment soured on Thursday as US President Trump’s optimism over the US-Ukraine minerals deal and the Ukraine-Russia ceasefire was overshadowed by Moscow’s claims that Ukraine’s attack on a Russian airfield could derail peace efforts. This and concerns over US tariffs hurting the global economy weighed on markets.
While hopes for US-China trade talks persisted, a firmer US Dollar, more substantial US data, and quarter-end positioning led to a pullback in gold from its recent highs, ending a three-day winning streak.
In other currencies, the EURUSD dropped to a two-week low after cautious ECB comments, while GBPUSD fell after the BoE’s dovish stance. Elsewhere, USDJPY bounced back after the BoJ’s mixed signals, and AUDUSD and NZDUSD saw their biggest daily drop in over three weeks. That said, USDCAD reversed from a two-day uptrend, while USDCHF surged after the SNB’s surprise rate cut. Last but not least, crude oil remained stable, but cryptocurrencies and equities declined.
The ECB’s Economic Bulletin and President Christine Lagarde highlighted concerns over US tariff policies, adding to the risk-off mood and helping EURUSD bears extend their mid-week decline from a five-month high. Weaker Eurozone construction output and German PPI also pressured EURUSD lower.
Meanwhile, the Bank of England (BoE) kept rates unchanged as expected, but cautious comments from Governor Andrew Bailey led GBPUSD to reverse from a 4.5-month high, despite positive UK consumer confidence and inflation expectations.
USDJPY bounced back from a weekly low, supported by the BoJ’s hesitation to signal more rate hikes, even as Japan’s inflation eased slightly.
Despite increasing hopes of the US-China trade dialogue and Beijing’s readiness for more stimulus, AUDUSD and NZDUSD drop for the fourth consecutive day heading into Friday’s European session. Meanwhile, hawkish comments from BoC Governor and firmer crude oil prices triggered the USDCAD pair’s retreat from a weekly high, while also snapping a two-day winning streak, before resuming the gradual increase.
Gold prices pulled back from a 3.5-month technical resistance, ending a three-day winning streak and retreating from an all-time high, amid a stronger US Dollar, mixed sentiment, and market consolidation at quarter-end. With little movement on Friday, gold remains pressured near the previous resistance, now acting as support around $3,005.
Crude oil prices stayed strong over the past two days despite a firmer US Dollar, supported by rising supply challenges, particularly in the Middle East. However, the rebound lost momentum early Friday due to mixed sentiment, economic concerns, and OPEC+ supply issues, along with the strong US Dollar.
Meanwhile, Trump’s optimism about making the US a global crypto hub failed to spark interest in Bitcoin (BTCUSD) and Ethereum (ETHUSD), leaving both cryptocurrencies under pressure early Friday. The downbeat performance also took clues from broader negative sentiment, higher crypto ETF outflows, and weak on-chain data.
Looking ahead, German PPI, Eurozone Consumer Confidence, and Canadian Retail Sales, along with speeches from Fed and ECB officials, are expected to keep markets busy but suggest an overall quiet Friday. However, mixed headlines affecting risk sentiment and quarter-end positioning could support the US Dollar in maintaining its recovery, while pushing Gold toward the $3,005 technical support. Major currencies and Antipodeans may continue their recent declines against the US Dollar, while crude oil, cryptocurrencies, and equities could see further downward moves.
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