Markets rallied last Friday on hopes for a US-China trade deal and upbeat US job data. But over the weekend, cautious signals from Beijing and the White House, fading Fed rate cut hopes, and a surprise OPEC+ move dampened sentiment. That said, holidays in China, Japan, South Korea, and Hong Kong also slowed trading ahead of key data/events this week.
Meanwhile, mixed messages from Trump and global unease over US policies added to the uncertainty.
Against this backdrop, the US dollar stayed weak, supporting gold and major currencies. However, oil stole the spotlight, plunging over 4% on supply-demand fears and shaking market confidence.
A weaker US dollar is helping EURUSD and GBPUSD build on Friday’s gains, while USDJPY slips for a second day, even with Tokyo markets closed. The euro is supported by upbeat remarks from ECB Vice President de Guindos, and the pound rises on strong UK manufacturing data, brushing off weaker mortgage figures. The GBPUSD rally also reflects market positioning ahead of Thursday’s Bank of England rate decision, especially with a UK holiday on Monday.
Meanwhile, dovish comments from the Bank of Japan’s Governor Ueda failed to lift USDJPY. Japan’s Finance Minister Kato signaled no plans to leverage US Treasury holdings in trade talks, weighing on the yen as holidays and stalled US-Japan negotiations keep traders cautious.
Weekend elections in Australia saw Prime Minister Anthony Albanese secure another term, as expected, boosting confidence in political stability and the potential for stronger US-Australia trade ties. Albanese’s post-win conversation with former President Trump added to the upbeat sentiment, helping AUDUSD surge to a five-month high—its second consecutive daily gain—even as April’s final Services PMI softened to 51.0 from a forecasted 51.6.
The New Zealand dollar (NZDUSD) mirrored the Aussie’s rise, posting a two-day winning streak despite a lack of major domestic drivers, riding on broader US dollar weakness.
Meanwhile, the Canadian Dollar (USDCAD) struggled for direction after a positive weekly close. Falling crude oil prices—Canada’s key export—kept pressure on the loonie. While Mark Carney’s election win improved hopes for stronger US-Canada ties, slow progress on trade negotiations and weak oil demand weighed on sentiment.
WTI Crude Oil kicked off the week with a sharp drop, falling up to 4.0% intraday following reports of a possible supply boost from OPEC+. The decline was fueled by growing concerns over global energy demand, partly driven by ongoing US-related trade tensions.
Additional pressure came from OPEC+ cracking down on members who have avoided output cuts, persistent doubts about China’s economic momentum, and easing fears of a prolonged Middle East conflict—all weighing heavily on oil sentiment. Amid these plays, WTI is now approaching its 50-month low from April, despite a stronger US dollar.
Gold prices continued their rebound, boosted by a weaker US dollar, technical support at the 21-SMA, and global market uncertainty. The metal also broke through a two-week resistance, now acting as support. A surge in demand from India, one of the largest gold consumers, alongside expectations of lower interest rates from major central banks, kept the bullish momentum intact.
Meanwhile, Bitcoin (BTC) and Ethereum (ETH) ended a two-day losing streak, supported by the weaker US dollar and hopes for more ETF approvals. However, technical resistance levels and ongoing global market uncertainties remain hurdles for crypto buyers.
With most Asian and UK markets closed on Monday, trading activity is expected to be limited. However, the US ISM Services PMI and market reactions to weekend headlines—including US-China trade talks, OPEC+ updates, and US-Ukraine discussions—could stir short-term moves.
Rising tensions in Gaza, fading hopes for major US trade deals, and lower expectations for Fed rate cuts may offer the US dollar some rebound potential, especially if US data surprises to the upside. That scenario could pressure gold, major currencies, Antipodeans, and crude oil.
Still, caution may cap market reactions ahead of a high-stakes week featuring Wednesday’s FOMC decision and Thursday’s Bank of England meeting, along with ongoing mixed global risk signals.
May the trading luck be with you!
