The market sentiment remains slightly positive as the US-Vietnam trade deal and easing tensions with China, including the reversal of certain chip software and ethane export sanctions, support risk appetite. However, pressure builds on US President Trump’s “Big Beautiful Bill” as some Republicans join Democrats in blocking its passage in the House. Trump also demanded the immediate resignation of Fed Chair Powell via Truth Social, raising concerns about a weak US jobs report; however, Bloomberg noted that it’s unclear if Powell will step down next year. While US ADP employment data disappointed, the drop in Challenger job cuts offered a partial offset.
Geopolitical tensions rose as South Korea reported North Korea’s readiness to send troops to aid Russia in Ukraine, while UK political turmoil dragged down bond yields and the British Pound (GBP). Despite a surprise rise in weekly crude inventories, oil prices surged on expectations of a further decline in US rigs, as indicated by the Dallas Fed Survey.
In economic data, China’s Caixin Services PMI and Canada’s manufacturing PMI weakened, while Japan and Australia’s services PMIs improved. However, Australia’s trade surplus shrank, and New Zealand’s commodity prices fell.
Against this backdrop, the US Dollar Index (DXY) rebounded from multi-month lows, gold rose on cautious optimism before pulling back slightly, and crude oil marked its biggest daily gain in two weeks before trimming some of it.
Cryptocurrencies extended recent gains, equities traded mixed, Antipodean currencies struggled to hold weekly advances, and bond yields remained slightly higher. Major currencies paused their rallies, while GBPUSD sharply reversed after hitting its highest level since October 2021.
EURUSD and GBPUSD stay under pressure after pulling back from their highest levels since late 2021, while USDJPY holds its rebound from a two-week low. EURUSD struggles to reflect ECB President Christine Lagarde’s optimistic tone, and GBPUSD is weighed down by political turmoil involving UK Chancellor Rachel Reeves and concerns about the government hiding fiscal problems. This led to a sharp rise in British bond yields and caused GBPUSD’s biggest daily drop in over two weeks.
USDJPY holds firm as US-Japan trade talks remain stuck, with Trump hinting at a delay in reaching a deal and the potential for higher tariffs after the July 9 deadline. Meanwhile, BoJ board member Hajime Takata suggested more rate hikes but failed to boost the yen. Japan’s improved Services PMI also didn’t support JPY, especially as the US Dollar rebounds and cautious optimism returns to markets.
AUDUSD halts its three-day winning streak, NZDUSD extends its pullback from the previous day, and USDCAD rebounds from two-week lows amid mixed signals from the commodities market and domestic data. Australia’s June final Services PMI improved to 51.8 from 50.6, but May’s trade surplus dropped to +2238 million, missing expectations of +5091 million and down from +5413 million previously. In New Zealand, the ANZ Commodity Price Index fell by 2.3%, reversing a 1.9% gain. Meanwhile, Canada’s June Manufacturing PMI slipped to 45.6 from 46.1. USDCAD’s performance is also influenced by strong crude oil prices—Canada’s key export—and renewed optimism over US-Canada trade ties after Ottawa backed away from policies that threatened US tech firms.
Gold prices edge higher, on track for their first weekly gain in three, as a combination of factors boosts safe-haven demand. Uncertainty over Fed Chair Powell’s future—following Trump’s call for his resignation—adds to concerns sparked by the weaker-than-expected US ADP Employment Change. Meanwhile, mixed signals on US trade deals and growing political resistance to Trump’s tax-and-spending bill further dent confidence in the US economic outlook, keeping the US Dollar under pressure and supporting XAUUSD.
Global macroeconomic conditions also favor gold. China's steady official gold purchases, along with ongoing buying by major central banks, highlight strong institutional demand. At the same time, geopolitical tensions—such as North Korea’s reported willingness to support Russia in Ukraine and political instability in the UK—add to market caution. Despite some improvements in service sector PMIs across Japan and Australia, weaker manufacturing data from Canada and slower trade from Australia and New Zealand signal uneven global recovery, keeping risk appetite in check and boosting gold's appeal as a hedge.
Crude oil posted its biggest daily gain in over two weeks after a Dallas Fed report suggested a pause in plans to expand oil rig activity, signaling tighter future supply. The rally was further supported by renewed optimism over China’s energy demand recovery and anticipation ahead of this weekend’s OPEC+ meeting, where a potential output increase is on the table. Traders shrugged off a surprise build in US weekly inventories, focusing instead on supply-side risks and global demand prospects.
Meanwhile, cryptocurrencies surged on growing optimism around global trade deals and news of a new ETF set to provide traditional investors with exposure to Solana, one of the leading crypto assets. This development, alongside signs of renewed institutional inflows, gave an additional boost to Bitcoin (BTCUSD) and Ethereum (ETHUSD), both of which extended their recent gains. Broader risk sentiment, helped by a slightly weaker US Dollar and hopes of central bank easing later in the year, also added fuel to crypto market momentum.
Thursday is set to be an active day for markets as the US releases key economic data, including the monthly non-farm payrolls report, ISM Services PMI, and weekly jobless claims, ahead of Friday’s Independence Day holiday. Traders will also keep an eye on important global releases, such as EU PMIs, Swiss inflation figures, and Canada’s trade balance. In addition, developments around the final approval of President Trump’s “Big Beautiful Bill” and progress on US trade agreements with global partners are likely to drive market sentiment and volatility.
The US Dollar may extend its recent recovery, especially if Friday’s jobs report surprises to the upside, contradicting the earlier ADP miss. Optimism over trade deals and a successful passage of Trump’s fiscal bill could further boost the greenback. Such a scenario may weigh on major currencies, commodity-linked Antipodeans, and crude oil prices. However, gold remains supported by safe-haven demand and a dovish Fed bias, potentially aiming toward the $3,455 resistance area.
Meanwhile, cryptocurrencies and equities may continue their upward drift, fueled by improving risk appetite and growing institutional interest. Bond yields, however, are likely to stay firm, posing a challenge to broader risk-on sentiment during this holiday-shortened week. Overall, a mix of high-impact data, political developments, and global economic signals promises an eventful close to the trading week.
May the trading luck be with you!
