Markets showed signs of caution while awaiting updates from US-China trade talks, before the World Bank’s updated global growth forecasts shook things up.
WTI crude oil wound up erasing its intraday gains on downgraded 2025 growth estimates while Treasury yields and the dollar took advantage of safe-haven gains.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- BOJ Gov. Ueda noted that they have limited room to support growth with interest rate cuts
- Japanese Finance Minister Kato encouraged investors to buy JGBs and added they will conduct fiscal policy appropriately
- Australia Westpac Consumer Confidence Index for June 2025: 92.6 (94.4 forecast; 92.1 previous)
- Australia NAB Business Confidence for May 2025: 2.0 (-3.0 forecast; -1.0 previous)
- ECB official Rehn reiterated that they will take decisions on a meeting-by-meeting basis
- ECB official Villeroy said that they go according to the data flow in deciding rates but that policy and inflation are now in a favorable zone
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U.K. Claimant Count Change for May 2025: 33.1k (10.0k forecast; 5.2k previous)
- Average Earnings incl. Bonus (3Mo/Yr) for April 2025: 5.3% y/y (5.4% y/y forecast; 5.5% y/y previous)
- Unemployment Rate for April 2025: 4.6% (4.5% forecast; 4.5% previous)
- U.S. Commerce Secretary Lutnick said that US-China talks are “going really well” and will continue the next day
- World Bank slashed growth forecast for 2025 from 2.7% to 2.3% due to tariffs and global uncertainty
- Japan Machine Tool Orders for May 2025: 3.4% y/y (4.0% y/y forecast; 7.7% y/y previous)
- Swiss SECO Consumer Confidence for May 2025: -37.0 (-38.0 forecast; -42.0 previous)
- U.S. NFIB Business Optimism Index for May 2025: 98.8 (96.0 forecast; 95.8 previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Tuesday was a light day in terms of economic releases, leaving market players to pay extra close attention to US-China talks in London… which turned out to be underwhelming (again).
Some market optimism was in play during Asian market hours, allowing crude oil and US equity futures to rake in some risk-on gains while gold remained on the back foot. However, the tide seemed to turn around the start of the London session, leading the safe-haven precious metal to regain ground on increased market anxiety while talks resumed.
Bitcoin, which surged to $110K levels early in the day, continued to retreat on profit-taking and the lack of major crypto market developments. A more pronounced selloff was seen right around the time the World Bank released its latest growth forecasts, which featured a hefty downgrade for 2025 prospects on account of global trade uncertainty.
WTI crude oil, which had been testing the $66 per barrel level, also took a nasty tumble that lasted until the end of the US session and left the energy commodity down 0.90%. Gold also took some hits from profit-taking while US equity indices managed to squeeze out some gains since US Commerce Secretary said that US-China talks are “going really well” and are set to continue the next day.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dollar started off on a cautious note, as traders took cues mostly from risk sentiment while waiting for more significant progress on US-China trade talks.
Positive expectations based on previous day developments appeared to prop USD higher early in Asia, but the gains were short-lived as market anxiety kicked in while discussions were ongoing. GBP saw notable losses when the UK jobs report fell short of estimates and revealed a sharp tumble in job vacancies, while the rest of the dollar pairs eased back to daily open prices before US markets opened.
Safe-haven flows seemed to boost USD right around the time the World Bank released its latest economic forecasts, citing weaker global growth prospects for the year due to uncertainty related to US trade policy. Upbeat remarks from Commerce Secretary Lutnick on how US-China talks are “going really well” likely contributed to dollar strength as well.
By session’s end, the dollar closed mixed as it weakened to comdolls and the euro while holding on to gains versus CHF, JPY, and GBP.
Upcoming Potential Catalysts on the Economic Calendar
- Canada Building Permits at 12:30 pm GMT
- U.S. Consumer Price Index at 12:30 pm GMT
- U.S. EIA Crude Oil Stocks Change at 2:30 pm GMT
- U.S. Monthly Budget Statement at 6:00 pm GMT
- New Zealand Electronic Retail Card Spending at 10:45 pm GMT
- U.K. RICS House Price Balance at 11:01 pm GMT
- Japan BSI Large Manufacturing at 11:50 pm GMT
Markets could see some calm before the U.S. CPI storm today, as traders could sit on their hands while bracing for the release of high-impact inflation data. Look out for indications that Trump’s tariffs are starting to take effect on consumer price pressures since the results could impact Fed policy expectations and overall sentiment.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
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