With European traders still out for the holiday and no major data on deck, markets zeroed in on global trade tensions and chatter that Trump might oust Fed Chair Powell.
How did the major assets react to these concerns?
Here are the updates from the latest trading sessions!
Headlines:
- Over the weekend, the US and Iran concluded a second round of nuclear talks, with both sides indicating there has been progress
- As expected, PBOC kept its 1-year and 5-year loan prime rates steady at 3.1% and 3.6%, respectively
- China warns it “will take countermeasures in a resolute and reciprocal manner” against countries striking trade deals with US at its expense
- Financial Times: China’s state-backed funds have been pulling back from investing in the funds of US-headquartered private capital firms
- According to a regulatory filing published on Monday, Strategy bought 6,556 bitcoin, roughly spending $555.8M
- Russia’s economy ministry cuts 2025 Brent price forecast by nearly 17% to $68 per barrel
- FOMC voting member Austan Goolsbee emphasized focus on long-term inflation expectations, and still sees lower rates in 12 to 18 months
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Risk assets tumbled on Monday as Trump escalated his criticism of Fed Chair Powell, calling him “Mr. Too Late” and “a major loser” while demanding immediate interest rate cuts. This attack on the Fed’s independence triggered widespread selling of US assets in what analysts dubbed a “Sell America” response.
The S&P 500, Dow, and Nasdaq all plunged around 2.5% while Treasury yields climbed, with the 10-year yield rising 7.2 basis points to 4.41%. European markets remained closed for Easter Monday, leaving US markets to bear the brunt of the increased volatility. Asian markets showed mixed performance, with Japan’s Nikkei 225 Index falling 1.3% while China’s Shanghai Composite rose 0.5%.
Gold surged to a record high above $3,420 an ounce as investors sought alternatives to traditional US safe havens.
Meanwhile, oil prices fell 2.5% to $63.08 a barrel on progress in US-Iran nuclear talks. Bitcoin benefited from the turmoil, rising 3.9%. Adding to market anxiety, China threatened retaliation against countries making trade deals with the US at its expense, further straining already tense economic relations.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The dollar stumbled out of the gate this week, dragged down by fresh trade and U.S. growth concerns. The selloff kicked off in Asia after China warned other countries against cutting trade deals with the US, sending the Dollar Index sliding from near 99.17.
The selling picked up in early European trading, with USD/CHF taking the biggest hit. The pair plunged to a 10-year low as investors piled into the Swiss franc, spooked by rising uncertainty around US policy.
The Greenback caught a break as US traders returned from the Easter holiday, then gained momentum after Trump ranted against Fed Chair Powell on Truth Social. Threats against the Fed’s independence initially dragged the dollar lower alongside a sharp drop in US equities. But by the afternoon, the dollar clawed back some ground. Profit-taking, higher Treasury yields, and a pause in gold’s surge likely helped slow the bleeding.
Still, the damage was done. The Dollar Index wrapped up the day at its lowest level since late 2023, and the broader tone stayed firmly bearish.
Upcoming Potential Catalysts on the Economic Calendar:
- New Zealand balance of trade for March at 10:45 pm GMT
- BOJ core consumer prices index at 5:00 am GMT
- ECB member Knot speech at 10:30 am GMT
- Canada producer prices index at 12:30 pm GMT
- U.S. Fed Jefferson speech at 1:00 pm GMT
- U.S. Fed Harker speech at 1:30 pm GMT
- Euro area consumer confidence flash for April 2025 at 2:00 pm GMT
- U.S. Richmond Fed manufacturing index for April 2025 at 2:00 pm GMT
- ECB member Guindos speech at 5:00 pm GMT
- BoE member Breeden speech at 6:00 pm GMT
- U.S. Fed Kashkari speech at 6:00 pm GMT
- U.S. API crude oil stock change for April 18, 2025 at 8:30 pm GMT
- U.S. Fed Kugler speech at 10:00 pm GMT
- Australia S&P Global flash PMIs at 11:00 pm GMT
European session traders will come back from holidays with ECB speeches and euro area confidence data, which could move the euro if sentiment worsens or policymakers hint at easing. In the U.S., traders will likely watch multiple Fed speakers, the Richmond index, and API oil data.
Of course, keep your eyes peeled for any Trump jabs at Powell or fresh trade headlines that could stir up risk sentiment!
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!