The Greenback saw some gains amid worries about US trade policies and potential tariffs. The US Dollar Index (DXY) climbed to multi-day highs above 97.00, even with generally lower US yields. On Thursday, attention will shift to the weekly Initial Jobless Claims and speeches from Fed officials Musalem, Waller, and Daly. The EUR/USD pair nearly touched recent lows below 1.1700, with upcoming German Inflation Rate figures and a speech from the ECB’s Cipollone.

Currency Movements

GBP/USD traded around 1.3600 with minimal movement in the Greenback, while UK fiscal issues continued to draw attention. The RICS House Price Balance is the only UK data release on Thursday. The USD/JPY faced selling pressure after briefly exceeding 147.00, finishing around 146.00. In Japan, significant reports include Producer Prices and Foreign Bond Investment figures. AUD/USD tested support at 0.6500 before rising to 0.6540 as the session closed, with the Westpac Consumer Confidence index coming soon. WTI prices approached $69.00 per barrel in light of tariffs and geopolitical tensions. Gold surpassed $3,310 per ounce due to mixed US yields, while silver dropped near $36.00 per ounce. The Dollar’s modest increase, despite lower US yields, highlights a market driven more by trade sentiment than usual rate dynamics. The DXY rising above 97.00 suggests investors are seeking safe havens due to tariff uncertainties and their possible effects on global growth. This gap between lower Treasury yields and a stronger Dollar may not last, but currently, traders seem focused on defensive positioning.

Economic Indicators And Market Responses

We are closely watching Thursday’s events, especially the weekly jobless claims. While dips in yields often coincide with weak job data, surprises could press for a steeper yield curve and highlight the US job market’s resilience. The comments from Musalem, Waller, and Daly may provide insights into future rate paths, particularly if they express concerns about current market pricing. In the euro area, the single currency slipped near previous lows under 1.1700. This movement likely reflects soft expectations for German inflation data and cautious policy rhetoric. Cipollone’s remarks may influence the ECB’s stance on its balance sheet, which traders should approach with caution. Any hint of less support—even subtle—could lead to re-pricing along the curve. Sterling showed limited movement, hovering around 1.3600. However, ongoing fiscal discussions in the UK could change this quickly. While the RICS housing report may not have a significant impact on risk premiums, it’s essential to monitor how housing stress might affect consumer confidence and spending. In Asia, the yen faced selling after reaching 147.00 but rebounded to close around 146.00. This drop occurred despite supportive macro conditions. Japanese Producer Price Index data and bond flows may not solely drive volatility, but when considered within the current global sentiment, they will provide valuable information. We continue to assess if local inflation trends necessitate more significant policy adjustments. The Aussie tested 0.6500 but found support quickly. This responsiveness suggests technical positioning, as traders defend critical levels amid waning momentum. Consumer sentiment data can often lead to active trading sessions, especially given ongoing concerns about household debt and its effects on demand. Commodities also deserve some attention. WTI near $69.00 comes amid uncertainty about tariffs and regional conflicts. This level acts as a pivot; any escalation in tensions or fresh supply constraints could push prices higher. Gold’s rise past $3,310 indicates strong demand for hedging amid fluctuating US yields. Traders are probably increasing their positions as protection against wider balance sheet volatility. Meanwhile, silver’s decline toward $36.00 shows it hasn’t followed gold’s upward momentum, suggesting a selective focus on safe havens rather than a broad commodity surge. In this environment, we are primarily adjusting exposure levels and actively monitoring relative value changes among these currency pairs and assets, rather than tying expectations to absolute price points. Price action has favored momentum shifts just beneath stable surface levels, where vigilance can be rewarding. Create your live VT Markets account and start trading now.

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