The U.S. dollar had a rocky start but was able to stage a solid comeback later in the day thanks mostly to upbeat U.S. consumer confidence data.
Risk appetite also appeared to improve, leading to a positive finish for stock indices while safe-haven gold slid deeper in the red.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- U.K. government announced 3 billion GBP investment plan to aimed at creating 120,000 new training places for locals in order to cut foreign worker dependence
- BOJ Governor Kuroda acknowledged that they are moving close to the inflation target but not quite there yet
- China Industrial Profits (YTD) YoY for April 2025: 1.4% y/y (1.2% y/y forecast; 0.8% y/y previous)
- Chinese state media outlet Global Times highlighted industrial resilience in “new driving force sectors” like equipment and high-tech manufacturing
- Goldman Sachs predicted lower oil prices for this year and the next, driven by production by non-OPEC nations
- Reuters reported that the Japanese Ministry of Finance was considering trimming super-long bond issuance in response to the recent surge in yields
- Swiss Balance of Trade for April 2025: 6.3B (4.7B forecast; 5.3B previous)
- Germany GfK Consumer Confidence for June 2025: -19.9 (-19.0 forecast; -20.6 previous)
- France Consumer Prices Index Growth Rate Prel for May 2025: -0.1% m/m (0.1% m/m forecast; 0.6% m/m previous); 0.7% y/y (1.0% y/y forecast; 0.8% y/y previous)
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Mixed commentary from ECB policymakers:
- ECB official Patsalides said that a larger interest rate cut is unwarranted now, citing risk of rising in European yields
- ECB official Holzmann also noted that the central bank should hold off further rate cuts until at least September
- ECB official Simkus pointed out that balance of risks to inflation are to the downside and that June cut is likely
- ECB official Villeroy said that policy normalization in the region is not yet complete, as underscored by downbeat French CPI
- Swiss Economy Minister Guy Parmelin expressed optimism that Switzerland can reach trade deal with the U.S. by July to lift 31% tariffs and avoid additional 50% tariffs
- SNB Governor Schlegel said that they cannot rule out negative inflation in the coming months and that trade uncertainties are enormous
- Fed official Kashkari reiterated that it will take time for full effect of tariffs to pass through prices, supporting the idea of maintaining policy in “wait and see” mode
- U.S. President Trump warned that Russia’s Putin is “playing with fire” and could be mulling another round of sanctions after the weekend’s drone strikes
- Euro area Consumer Confidence for May 2025: -15.2 (-15.2 forecast; -16.6 previous)
- Canada Wholesale Sales for April 2025: -0.9% m/m (0.1% m/m forecast; 0.2% m/m previous)
- U.S. Durable Goods Orders for April 2025: -6.3% m/m (-6.8% m/m forecast; 9.2% m/m previous); Core Durable Goods Orders for April 2025: 0.2% m/m (-0.2% m/m forecast; 0.0% m/m previous)
- White House Economic Adviser Hassett said that there could be more trade deals during this week and that the Senate is making progress on the tax bill
- U.S. House Price Index growth rate for March 2025: 3.7% y/y (3.9% y/y forecast; 3.9% y/y previous); -0.1% m/m (0.2% m/m forecast; 0.1% m/m previous)
- U.S. S&P/Case-Shiller Home Price growth rate for March 2025: 4.1% y/y (4.2% y/y forecast; 4.5% y/y previous); 1.1% m/m (0.5% m/m forecast; 0.7% m/m previous)
- U.S. CB Consumer Confidence for May 2025: 98.0 (84.0 forecast; 86.0 previous)
- U.S. Dallas Fed Manufacturing Index for May 2025: -15.3 (-25.0 forecast; -35.8 previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets appeared unsteady during the early Asian market hours, with risk assets and USD-denominated holdings still reeling from the previous session’s declines.
Treasury yields stayed on the back foot until the start of the London session, during which a brief round of consolidation was seen before another wave lower ensued as U.S. traders returned from their Memorial Day holiday and worries about the government deficit lingered.
U.S. economic data turned out mostly stronger than expected, with durable goods orders figures and the CB consumer confidence index all surprising to the upside and lifting the U.S. dollar. Equities also cheered these positive reports, leading both the S&P 500 index and Nasdaq to close more than 2% in the green.
Gold, on the other hand, continued to shed its safe-haven gains as traders dumped the precious metal while the global trade outlook kept improving. Bitcoin managed to pull back in the black as risk appetite improved on the return of U.K. traders from their bank holiday but retreated upon testing the $110K resistance again.
WTI crude oil, which had been chopping around during the first half of the day, drew bearish pressure from Goldman Sachs’ prediction of lower prices for this year and the next due to higher production by non-OPEC nations. The energy commodity found a bit of reprieve when Trump posted on Truth Social that Russian President Putin is “playing with fire” as this put the focus back on potential sanctions on Russia’s oil.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Major pairs started off cautiously in ranges, with the exception of USD/JPY that dipped lower around BOJ Governor Ueda’s speech during which he acknowledged that the economy is moving closer to the inflation target.
The dollar started climbing broadly higher as the Asian session went on, as traders probably booked profits off their previous “Sell America” positions, allowing USD to extend its climb against majority of its counterparts during London market hours.
The Swiss franc tried to put up a decent fight thanks to upbeat trade balance data but still saw gradual losses to the Greenback after SNB head Schlegel said that they’re not ruling out negative inflation in the coming months. Euro weakness also came in play when the French preliminary CPI fell short of estimates and some ECB officials highlighted the need for June easing.
Stronger than expected U.S. durable goods orders data spurred another leg higher for the dollar during the U.S. session, followed by an upbeat CB consumer confidence index. USD closed higher across the board, raking in its strongest lead versus JPY (+1.07%) followed by NZD (+0.90%) while trimming some gains versus GBP (+0.36%).
Upcoming Potential Catalysts on the Economic Calendar:
- Germany Import Prices growth rate at 6:00 am GMT
- France Non Farm Payrolls at 6:45 am GMT
- France GDP Growth Rate Final at 6:45 am GMT
- France PPI at 6:45 am GMT
- Germany Unemployment Rate at 7:55 am GMT
- Swiss Economic Sentiment Index at 8:00 am GMT
- ECB Consumer Inflation Expectations at 8:00 am GMT
- U.S. Fed official Kashkari’s Speech at 8:00 am GMT
- U.S. Richmond Fed Manufacturing Index at 2:00 pm GMT
- U.K. BoE official Pill’s Speech at 3:00 pm GMT
- U.S. FOMC Meeting Minutes at 6:00 pm GMT
- U.S. API Crude Oil Stock Change at 8:30 pm GMT
There’s not much in the way of top-tier economic releases during the London session, but this could be the calm before the storm as the FOMC meeting minutes are up for release during U.S. market hours.
Be sure to keep an eye out for commentary regarding tariffs uncertainty and inflation, plus the implications of these on their future policy moves.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
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