A bit of calm was seen in the financial markets before volatility picked up around the OPEC announcement and the release of the FOMC meeting minutes.
In the forex scene, the Australian CPI and RBNZ interest rate decision sparked notable moves as well.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- Australia Consumer Prices Index for April 2025: 2.4% y/y (2.1% y/y forecast; 2.4% y/y previous)
- Australia Construction Work Done for March 31, 2025: 0.0% q/q (0.4% q/q forecast; 0.5% q/q previous)
- Bank of Japan Governor Ueda said tariff negotiations means outlook remains uncertain and that the bank is on alert regarding the impact of super-long yield swings on borrowing costs
- Japanese Finance Minister Kato reiterated they are closely monitoring bond market situation
- RBNZ cut interest rates by 0.25% as expected in a 5-1 vote, Governor Hawkesby reiterated no pre-set easing path during press conference
- Chevron’s U.S. license to produce oil in Venezuela expired, Trump administration granted narrow license to maintain facilities amid sanctions
- Germany will provide €5B in military aid to Ukraine to help build long-range weapons to hit targets on Russian territory.
- Germany Import Prices for April 2025: -1.7% m/m (-0.6% m/m forecast; -1.0% m/m
- France Non Farm Payrolls for March 31, 2025: -0.1% q/q (-0.1% q/q forecast; -0.3% q/q previous)
- France GDP Growth Rate Final for March 31, 2025: 0.6% y/y (0.8% y/y forecast; 0.6% y/y previous); 0.1% q/q (0.1% q/q forecast; -0.1% q/q previous)
- France Producer Prices Index growth rate for April 2025: -4.3% m/m (-0.3% m/m forecast; -0.6% m/m previous); -0.8% y/y (2.9% y/y forecast; -0.6% y/y previous)
- Germany Unemployment Rate for May 2025: 6.3% (6.4% forecast; 6.3% previous)
- Rumors that ECB head Lagarde will be cutting her term short to head WEF were denied by central bank
- Swiss Economic Sentiment Index for May 2025: -22.0 (-35.0 forecast; -51.6 previous)
- Euro area ECB Consumer Inflation Expectations for April 2025: 3.1% (3.0% forecast; 2.9% previous)
- EU formally launched talks with United Arab Emirates for bilateral free trade agreement while also in constant conversation with U.S.
- Fed official Kashkari: “Many more months of positive inflation data” would be needed to justify rate cuts and that current policy is “modestly restrictive”
- U.S. Richmond Fed Manufacturing Index for May 2025: -9.0 (-11.0 forecast; -13.0 previous)
- U.S. Dallas Fed Services Index for May 2025: -10.1 (-10.0 forecast; -19.4 previous)
- OPEC reaffirmed level of oil production for OPEC and non-OPEC nations, delegate mentioned plans to raise output by 411K bpd in July
- FOMC meeting minutes: Officials view recession as “almost as likely” as baseline forecast, inflation probably not returning to target until 2027 and joblessness to rise later in the year
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Investors seemed anxious ahead of the release of the FOMC meeting minutes later in the day, keeping most asset classes trading cautiously in ranges during the Asian and London sessions.
WTI crude oil tossed and turned before getting a boost from reports that Chevron’s license to produce oil in Venezuela officially expired, reviving global supply concerns along with Germany’s commitment to provide military aid to Ukraine.
Later on, the energy commodity returned majority of its gains when the OPEC reaffirmed its production plans and a delegate mentioned plans for a 411K bpd hike for July, then extended its slump after the FOMC minutes were released.
Gold, which appeared to be struggling to stay afloat, eventually turned lower during the latter part of the European session and even extended its slide after the release of the FOMC meeting minutes.
Other risk assets like U.S. equity indices also had a bearish reaction to the FOMC minutes, as the transcript of discussions painted a downbeat economic outlook. As it turned out, Fed staff predicted that a recession is “almost as likely” as their baseline projections and that inflation probably wouldn’t reach the 2% target until 2027.
Bitcoin, which was already on a downward trajectory when U.S. markets opened, sank deeper into the $107K area on fading optimism about strategic crypto reserve announcements and the lack of bigger regulatory developments during the bitcoin conference in Las Vegas.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
Volatility was a bit more pronounced in the currency markets, with USD/JPY spiking lower on BOJ Governor Ueda’s remarks about closely monitoring super-long bond yields and AUD/USD dipping on Australia’s CPI release.
The RBNZ decision to cut rates by 0.25% as expected led to a pop higher NZD/USD, as the central bank refrained from announcing a larger easing move and even cited a meeting-by-meeting approach in their press conference.
After some profit-taking from its rallies, the Kiwi eventually joined the rest of the major currencies in advancing against USD during the first half of the London session, before reversing course and taking advantage of some safe-haven flows resulting from downbeat mid-tier eurozone data.
The dollar returned some of its intraday gains as U.S. markets opened, then bottomed out from its short-term slide when the Richmond manufacturing index came in line with expectations of an improvement from -13 to -9. From there, dollar pairs traded cautiously ahead of the FOMC minutes release, which revealed a somber outlook by policymakers but failed to steer the U.S. currency in a clear direction.
By session’s end, the dollar wound up lower against the stronger NZD (-0.33%) and CHF (-0.05%) while closing in the black against the rest of its rivals, particularly JPY (+0.31%).
Upcoming Potential Catalysts on the Economic Calendar:
- Japan Consumer Confidence at 5:00 am GMT
- Canada Current Account Balance at 12:30 pm GMT
- U.S. Initial Jobless Claims at 12:30 pm GMT
- U.S. GDP Price Index 2nd Est at 12:30 pm GMT
- U.S. Preliminary GDP Q1 2025 at 12:30 pm GMT
- Fed Official Barkin’s Speech at 12:30 pm GMT
- U.S. Pending Home Sales at 2:00 pm GMT
- Fed Official Goolsbee’s Speech at 2:40 pm GMT
- U.S. EIA Crude Oil Stocks Change at 4:00 pm GMT
- Fed Official Kugler’s Speech at 6:00 pm GMT
- Fed Official Daly’s Speech at 8:00 pm GMT
- New Zealand ANZ Roy Morgan Consumer Confidence at 10:00 pm GMT
- New Zealand Building Permits at 10:45 pm GMT
- Japan Core CPI at 11:30 pm GMT
- Japan Tokyo CPI at 11:30 pm GMT
- Japan Unemployment Rate for April 2025 at 11:30 pm GMT
- Japan Industrial Production at 11:50 pm GMT
- Japan Retail Sales for April 2025 at 11:50 pm GMT
The coast looks clear in terms of top-tier economic releases during the European session, so forex volatility might not pick up until U.S. market hours during which the preliminary U.S. GDP report and initial jobless claims will be printed.
Stay on the lookout for commentary on U.S. tariffs, inflation and interest rates since a handful of Fed officials (Barkin, Goolsbee, Kugler and Daly) are scheduled to give testimonies during the New York session as well.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
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