Markets had plenty to chew on Thursday, from Fed rate cut speculations and softer U.S. GDP to upbeat durable goods orders and a potential thaw in U.S.–China trade relations.
Stocks and oil climbed, gold bounced off intraday lows, and the dollar slid across the board as traders shifted into risk-on mode.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- WSJ: Trump considering naming next Fed Chair early in a bid to undermine Powell
- Germany GfK consumer confidence for July: -20.3 (-19.0 forecast; -19.9 previous)
- BOE Gov. Bailey said a “careful approach” to cutting rates remains appropriate amid ongoing geopolitical and economic instability
- Canada wholesale sales prelim for May: -0.4% m/m (-0.5% m/m forecast; -2.3% m/m previous)
- U.S. final Q1 GDP growth rate: -0.5% q/q (-0.2% q/q forecast; 2.4% q/q previous)
- U.S. GDP price index final for Q1: 3.8% q/q (3.7% q/q forecast; 2.3% q/q previous)
- U.S. core PCE prices final for Q1: 3.5% q/q (3.4% q/q forecast; 2.6% q/q previous)
- U.S. goods trade balance advance for May: -96.59B (-91.0B forecast; -87.62B previous)
- U.S. durable goods orders for May: 16.4% m/m (5.2% m/m forecast; -6.3% m/m previous); Core durable goods at 0.5% m/m (0.1% m/m forecast; 0.2% m/m previous)
- U.S. initial jobless claims for week ending June 21: 236k (247k forecast; 245k previous)
- U.S. Chicago Fed national activity index for May: -0.28 (-0.1 forecast; -0.25 previous)
-
U.S. pending home sales for May:
– 1.1% y/y (-2.1% y/y forecast; -2.5% y/y previous)
– 1.8% m/m (-0.3% m/m forecast; -6.3% m/m previous) - U.S. Kansas Fed manufacturing index for June: 5.0 (-5.0 forecast; -10.0 previous)
- Commerce Secretary Lutnick said the U.S. and China signed a trade understanding and sees at least 10 more deals on the way
- Russia is open to another output hike at the next OPEC+ meeting
- FOMC members favor a wait-and-see approach to cutting rates
- FOMC voting member Collins feels July would be too soon to consider cutting rates
- FOMC voting member Barr said current monetary policy allows them to “wait and see” how the economy unfolds
- FOMC voting member Goolsbee said “we’ve got to get a few months of clarity” before confirming the minimal impact of tariffs
- FOMC non-voting member Barkin favors waiting for more data, said there’s little upside in “heading too quickly in any one direction”
- FOMC non-voting member Daly sees a rate cut in the fall
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets looked to individual catalysts on Thursday as traders weighed economic data against easing geopolitical tensions. European stocks mostly closed in the green. Germany’s DAX tacked on 0.6% and London’s FTSE 100 edged up 0.2%, but France’s CAC 40 stalled out after a surprise dip in German consumer sentiment took some of the shine off.
Over in the U.S., the bulls had the upper hand. The S&P 500 climbed 0.8% and the Nasdaq 100 hit another record with a 0.9% jump, with mega-cap tech leading the charge. Jobless claims came in better than expected, and durable goods orders popped higher, giving risk appetite a shot in the arm. Q1 GDP was revised down to -0.5%, which only added fuel to the rate cut camp, even as the Fed keeps saying July might be too soon. Meanwhile, Commerce Secretary Lutnick said the U.S. and China signed a trade understanding and teased 10 more deals in the pipeline.
Gold had a jittery day near $3,330. It dipped on Fed rate cut uncertainty, but clawed back most of the losses after the U.S. dollar extended its losses. US10Y slipped to 4.25% as traders leaned into the dovish Fed narrative. WTI oil pushed higher early on the back of summer demand forecasts and a chunky inventory draw, touching $66.40 before settling at $65.40. Bitcoin didn’t join the party, falling to $107,000 as crypto stayed weak even with the dollar easing a bit.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dollar took a beating on Thursday as traders doubled down on Fed rate cut expectations. It started the day on shaky ground in Asia, with markets reacting to uncertainty over the Fed’s independence and overnight signals that made a July cut look more likely. The selling picked up steam heading into London, as risk appetite improved and safe-haven demand faded. By then, the Dollar Index was already inching closer to multi-year lows.
A brief consolidation occurred ahead of the U.S. session, but the respite proved temporary. The release of weaker-than-expected Q1 GDP data, revised down to -0.5% from -0.2%, alongside positive jobless claims and surprisingly strong durable goods orders, reignited dollar selling as markets interpreted the economic cocktail as supportive of policy easing. Fed officials’ comments suggesting July cuts were premature failed to stem the decline.
By session’s end, the Dollar Index had fallen 0.45% to 97.235, with the euro climbing to $1.1710 and sterling advancing to $1.3732. Commodity currencies also performed strongly, with the Australian dollar reaching $0.6549 as emerging market currencies extended their three-day rally against the struggling Greenback.
Upcoming Potential Catalysts on the Economic Calendar
- France CPI growth rate prelim for June at 6:45 am GMT
- Euro area economic sentiment for June at 9:00 am GMT
- Canada GDP prelim for May at 12:30 pm GMT
- U.S. personal income & spending for May at 12:30 pm GMT
- U.S. core PCE price index for May at 12:30 pm GMT
- U.S. Fed Hammack speech at 1:15 pm GMT
- U.S. Fed Cook speech at 1:15 pm GMT
- U.S. UoM consumer sentiment and inflation expectations for June at 2:00 pm GMT
The euro could see increased volatility during the European session with France’s CPI release. Any CPI or sentiment surprises could set the tone ahead of next week’s potential catalysts.
The U.S. session is likely to drive bigger moves, with core PCE (the Fed’s preferred inflation measure), consumer spending data, and Fed speak potentially shifting rate cut expectations and boosting USD volatility.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
