Market correlations were out of sync on Tuesday, as crude oil carried on with its steady decline while U.S. stock markets closed in the green.
Meanwhile, USD pairs appeared to move in tandem while traders adjusted their GDP expectations after the U.S. trade balance was released.
Which headlines drove price action in the latest trading sessions?
Headlines:
- Canadian PM Carney and Liberal Party won narrow victory in parliamentary elections, willing to sit with Trump to discuss trade ties
- Indian government reported progress in U.S. trade talks, prepared to offer U.S. “the most favored nation” clause
- Chinese Ministry of Commerce spokesperson reiterated that the U.S. should stop making tariffs threats if they want to make a resolution
- Russian President Vladimir Putin demanded control of four regions of Ukraine as part of any agreement to end his war
- Germany GfK Consumer Confidence for May 2025: -20.6 (-28.0 forecast; -24.5 previous)
- Euro area Consumer Inflation Expectations for April 2025: 29.6 (25.1 forecast; 24.4 previous)
- Euro area Consumer Confidence for April 2025: -16.7 (-16.7 forecast; -14.5 previous)
- Euro area Economic Sentiment for April 2025: 93.6 (94.0 forecast; 95.2 previous)
- ECB official Cipollone warned that trade uncertainty could reduce business investment, increase in financial market volatility could also weigh on growth
- U.S. Treasury Secretary Bessent suggested that tariffs revenue could be used for tax cuts, confirmed talks with Japan and progress with India and mentioned that Trump will sign executive order on auto tariffs within the day
- U.S. Retail Inventories Ex Autos Adv for March 2025: 0.4% m/m (-0.2% m/m forecast; 0.1% m/m previous)
- U.S. Wholesale Inventories MoM Adv for March 2025: 0.5% (0.6% forecast; 0.3% previous)
- U.S. Goods Trade Balance Adv for March 2025: -161.99B (-140.0B forecast; -147.91B previous)
- U.S. House Price Index for February 2025: 3.9% y/y (4.0% y/y forecast; 4.8% y/y previous); 0.1% m/m (0.4% m/m forecast; 0.2% m/m previous)
- U.S. S&P/Case-Shiller Home Price for February 2025: 4.5% y/y (4.7% y/y forecast; 4.7% y/y previous); 0.7% m/m (0.7% m/m forecast; 0.1% m/m previous)
- U.S. President Trump signed an executive order to soften their stance on auto tariffs
- U.S. Commerce Secretary Lutnick pointed out that tariffs adjustments will give U.S. automakers time to grow U.S. factories and jobs and that he’s securing a trade deal with an unnamed country
- U.S. CB Consumer Confidence for April 2025: 86.0 (89.0 forecast; 92.9 previous)
- U.S. JOLTs Job Openings for March 2025: 7.19M (7.4M forecast; 7.57M previous)
- U.S. Dallas Fed Services Revenues Index for April 2025: 3.8 (1.0 forecast; 1.3 previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Despite a relatively light schedule for the Asian session, commodities like gold and crude oil started off on bearish footing while U.S. equity futures and bitcoin held their ground.
Market players appeared to be optimistic ahead of U.S. Treasury Secretary Bessent’s press briefing, during which he confirmed that trade talks are ongoing with Japan and that they made good progress during negotiations with India, leading safe-haven gold to shed some of its gains.
However, WTI crude oil remained on the back foot, as traders stayed wary of the lack of developments in U.S. trade talks with China, especially after the Chinese Commerce Ministry reiterated that the U.S. should lift tariffs if they want to reach an agreement.
Later in the day, U.S. stock markets dipped upon seeing weaker than expected trade balance data, which spurred expectations of a downbeat U.S. advance GDP reading and reinforced Fed easing speculations, triggering a decline in Treasury yields as well.
The CB consumer confidence index also reflected deteriorating sentiment while the JOLTS job openings pointed to a potential NFP miss, but equities managed to pull higher thanks to resilience in tech sector shares and Trump’s executive order on softening auto tariffs.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback was off to a bullish start during Asian market hours, as traders likely booked profits after the previous session’s decline. A broad decline occurred around the start of the European session, which saw net positive data from the region, as the German GfK consumer climate index and Spanish flash CPI surprised to the upside.
The dollar soon regained its footing a few hours into the session while traders remained hopeful for trade developments leading up to U.S. Treasury Secretary Bessent’s press briefing. Although he did report some progress in trade talks, the lack of concrete details appeared to trigger disappointment among dollar bulls, along with downbeat U.S. trade balance.
Still, USD managed to recover from its dive just before another round of weak data – this time from the CB consumer confidence survey and JOLTS job openings report – capped gains and led to sideways price action for the remainder of the session.
The dollar was able to stay in positive territory by session’s end, raking in strong gains versus AUD (+0.72%) and NZD (+0.58%) while USD/CAD closed almost flat thanks to Loonie resilience after Canada’s election results confirmed a narrow victory for PM Carney and his Liberal Party.
Upcoming Potential Catalysts on the Economic Calendar:
- France Preliminary GDP for at 5:30 am GMT
- Germany Retail Sales at 6:00 am GMT
- Germany Import Prices at 6:00 am GMT
- U.K. Nationwide Housing Prices at 6:00 am GMT
- France Preliminary CPI at 6:45 am GMT
- Swiss KOF Leading Indicators at 7:00 am GMT
- Germany Unemployment Rate at 7:55 am GMT
- Swiss Economic Sentiment Index at 8:00 am GMT
- Germany GDP Growth Rate Flash at 8:00 am GMT
- Euro area GDP Growth Rate Flash at 9:00 am GMT
- ECB official Montagner’s Speech at 9:15 am GMT
- Germany Preliminary CPI at 12:00 pm GMT
- U.S. ADP National Employment Report at 12:15 pm GMT
- Canada Preliminary GDP at 12:30 pm GMT
- U.S. Advance GDP q/q at 12:30 pm GMT
- U.S. Wages Cost Index at 12:30 pm GMT
- U.S. Chicago PMI at 1:45 pm GMT
- U.S. Core PCE Price Index at 2:00 pm GMT
- U.S. Pending Home Sales at 2:00 pm GMT
- U.S. Personal Income and Spending at 2:00 pm GMT
- U.S. EIA Crude Oil Inventories at 2:30 pm GMT
- Canada BOC Summary of Deliberations at 5:00 pm GMT
All eyes and ears are likely on highly-anticipated U.S. data points, namely the advance GDP reading for Q1 2025 and the core PCE price index, which is said to be the Fed’s preferred inflation metric. Make sure to keep tabs on the ADP employment report as well since the results could impact NFP expectations.
Prior to this, stay on the lookout for flash CPI and GDP readings from the top dogs of the eurozone, Germany and France, as these could provide clues for the region’s overall growth and inflation readings while also influencing ECB policy expectations.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!