Traders were on edge on Wednesday as they tried to make sense of mixed signals from Washington and a fresh round of economic reports.
While President Trump hinted at easing tariffs and spared Fed Chair Powell (for now), the lack of firm commitments kept volatility high, with PMIs and risk sentiment swinging major assets around.
Here are the updates from the latest trading sessions!
Headlines:
- U.S. President Trump posted that China’s tariffs will “come down substantially but won’t be zero”
- S&P Global flash Australia manufacturing PMI for April: 51.7 (52.1 previous); Services PMI at 51.4 (51.6 previous)
- Japan Jibun Bank manufacturing PMI flash for April: 48.5 (47.8 forecast; 48.4 previous); Services PMI at 52.2 (49.7 forecast; 49.5 previous)
- U.K. public sector net borrowing for March: -16.44B GBP (-16.2B forecast GBP; -10.71B previous GBP)
- Germany HCOB manufacturing PMI flash for April: 48.0 (48.1 forecast; 48.3 previous); Services PMI at 48.8 (50.7 forecast; 50.9 previous)
- Euro area HCOB manufacturing PMI flash for April: 48.7 (47.5 forecast; 48.6 previous); Services PMI at 49.7 (50.7 forecast; 51.0 previous)
- U.K. S&P Global manufacturing PMI flash for April: 44.0 (44.3 forecast; 44.9 previous); Services PMI at April: 48.9 (52.0 forecast; 52.5 previous)
- Euro area trade balance for February: €24.0B (€15.1B forecast; €1.0B previous)
- Reuters reported OPEC+ members are considering another accelerated oil output increase in June
- Canada new housing price index for March: 0.0% m/m (0.1% m/m forecast; 0.1% m/m previous); 0.1% y/y (0.3% y/y forecast; 0.1% y/y previous)
- U.S. S&P Global manufacturing PMI flash for April: 50.7 (49.5 forecast; 50.2 previous); Services PMI at 51.4 (52.0 forecast; 54.4 previous)
- U.S. EIA crude oil stocks change for the week ending April 18: 0.24M (0.52M previous)
- U.S. Treasury Secretary Scott Bessent said on Wednesday that President Trump hasn’t offered to take down U.S. tariffs on China on a unilateral basis
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets were all over the charts on Wednesday after U.S. President Trump softened his stance on two key issues. He said he had no intention of firing Fed Chair Powell, though he still wants lower interest rates. On China trade, Trump said the 145% tariffs “will come down substantially” and he would be “very nice to China,” though warning Washington would dictate terms if no deal emerges.
Treasury Secretary Bessent initially boosted sentiment, declaring there is an “opportunity for a big deal” between the U.S. and China. However, he later clarified that there would be “no unilateral offer from Trump to cut China tariffs,” echoing White House spokesperson Karoline Leavitt’s similar statement.
These mixed signals sparked a volatile session, with the S&P 500 surging as much as 3.4% before enthusiasm waned, closing up just 1.7% as traders questioned the durability of Trump’s policy shifts. European markets, trading earlier, held onto stronger gains with Germany’s DAX jumping 2.36%.
Gold prices plunged 3.7% to $3,285, the biggest drop since 2013. The 10-year Treasury yield initially fell to 4.26% before completely reversing to 4.39% as risk sentiment turned. U.S. oil prices fell sharply to $62.20 after Reuters reported several OPEC+ members were pushing for accelerated output increases amid internal disputes over production quota compliance. Bitcoin showed relative stability at just under $94,000.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar extended its intraweek gains as traders priced in Trump’s recent policy updates. The dollar’s journey began with a surge during Asian trading after Trump’s comments on potential tariff reductions and not firing Powell. USD/JPY jumped to an eight-day high above 143.00, while the euro and pound fell sharply as investors embraced renewed risk appetite.
In Europe, economic data dampened European currencies further as flash PMIs disappointed across the board. U.K. numbers were particularly weak with the composite PMI falling to 48.2, its worst in 29 months, dragging GBP/USD lower to 1.3283. Eurozone services PMI dropped below the 50 expansion mark to 49.7, supporting further ECB rate cuts and adding pressure to the euro.
The Greenback’s rally intensified after U.S. PMI data beat expectations, with the manufacturing PMI coming in at 50.7 versus the forecasted 49.1, providing further justification for the pro-USD, “Buy America” trade.
Upcoming Potential Catalysts on the Economic Calendar:
- France consumer confidence for April at 6:45 am GMT
- Germany Ifo business climate for April at 8:00 am GMT
- U.K. CBI industrial trends orders for April at 10:00 am GMT
- U.S. initial jobless claims for April 19 at 12:30 pm GMT
- U.S. durable goods orders for March at 12:30 pm GMT
- ECB member Lane speech at 1:00 pm GMT
- U.S. existing home sales for March at 2:00 pm GMT
- U.S. Kansas Fed manufacturing index for April at 3:00 pm GMT
- ECB member Montagner speech at 3:05 pm GMT
- ECB member Donnery speech at 4:00 pm GMT
- U.S. Fed balance sheet for April 23 at 8:30 pm GMT
- Federal Reserve member Kashkari speech at 9:00 pm GMT
- U.K. GfK consumer confidence for April at 11:01 pm GMT
- Japan Tokyo CPI for April at 11:30 pm GMT
Traders are in for another busy day, as the European session features sentiment updates from France, Germany, and the U.K., with Germany’s IfO likely to shape euro direction.
In the U.S., traders will focus on jobless claims, durable goods, and Fed speeches that could offer clues on interest rate biases amid ongoing trade tension. Then there are unscheduled global trade-related updates, which may influence overall risk sentiment and demand for “risk” and safe-haven currencies.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
