Today’s U.S.-U.K. trade framework sent the dollar, stocks, and bitcoin climbing, while gold tumbled as risk appetite surged.
Sterling rose despite a BOE rate cut, and upbeat German data helped fuel a strong session across global markets.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- BOJ March meeting minutes show members split over how US policies impact rate hike schedule
- Germany industrial production MoM for March: 3.0% (0.5% forecast; -1.3% previous)
- Germany balance of trade for March: 21.1B (20.8B forecast; 17.7B previous)
- BOE Cuts Rates but Divided Vote Sparks GBP Rally
- Halifax U.K. house price index for April: 3.2% y/y (2.6% y/y forecast; 2.8% y/y previous); 0.3% m/m (-0.1% m/m forecast; -0.5% m/m previous)
- U.S. initial jobless claims for May 3: 228.0k (240.0k forecast; 241.0k previous)
- U.S. unit labour costs QoQ prelim for March 31: 5.7% (5.5% forecast; 2.2% previous)
- U.S. nonfarm productivity QoQ prelim for March 31: -0.8% (-0.6% forecast; 1.5% previous)
- BOC raised warning flags about the increased presence of hedge funds in the Canadian government bond market, as it signals debt levels are climbing in the financial system
- BOC’s Financial Stability Report said the financial system was resilient, but U.S. tariffs and Ottawa’s counter-tariffs could hurt financial stability
- On Thursday, U.S. President Trump announced a trade framework with the U.K.
- Arizona governor signs law for state to keep unclaimed crypto, creating a Bitcoin Reserve Fund without using taxpayer money
- U.S. imposes Iran-related sanctions on third China ‘teapot’ refinery, port terminal
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets rallied on Thursday and, no, it’s not because the new Pope has likely been to a tailgate. Instead, it’s mostly because Trump unveiled a framework of a trade agreement with the U.K., the first deal since his April tariff barrage.
U.S. stock indices closed firmly higher with the S&P 500 up 0.58%, Dow gaining 0.62%, and Nasdaq leading with a 1.07% jump. Airline stocks soared 5.4% on news that plane parts would be exempt from tariffs, while Boeing rose 3.3% after the U.K. committed to buying $10 billion of aircraft.
European equities outperformed, with Germany’s DAX and France’s CAC 40 each gaining over 1.1%, buoyed by the U.K. trade framework and surprisingly strong German industrial production data showing a 3.0% monthly increase. The Bank of England’s 25-basis-point rate cut to 4.25% provided additional support.
U.S. oil prices surged 3.2% to $60.00 amid improved global growth prospects, while gold plunged 2.5% to $3,309 as safe-haven demand evaporated. The 10-year Treasury yield jumped 9.8 basis points to 4.38% for similar reasons.
Bitcoin topped $100,000 for the first time since February, climbing 4.7% as risk appetite returned and institutional inflows increased.
Markets now turn their attention to upcoming U.S.-China trade talks in Switzerland, with Trump expressing unexpected optimism about potential outcomes.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar started Thursday on a steady note but traded lower at the Hong Kong/China market open. In Europe, optimism over a potential U.S.-U.K. trade deal bumped USD higher even as Germany printed strong factory data, which initially pressured the dollar against European currencies.
USD dipped against the pound during the BOE’s hawkish rate cut but mostly steadied in early U.S. trading, maintaining a relatively narrow range ahead of key developments.
Greenback’s fortunes dramatically reversed around 9:00-10:00, when Trump laid out the framework of the US-UK trade agreement. This announcement triggered an immediate and powerful rally across the board, with USD/JPY showing the most dramatic upward movement, climbing approximately 1.5%.
The dollar also posted notable gains against the euro, Swiss franc, and commodity currencies. Better-than-expected US jobless claims data provided additional support, helping USD/CHF reach gains of nearly 1% and keeping USD/EUR firmly higher by about 0.75%.
The broad-based dollar strength persisted into the close, with the Greenback ending the day solidly in the green against all major currencies.
Upcoming Potential Catalysts on the Economic Calendar:
- Swiss consumer confidence for April at 7:00 am GMT
- U.K. BoE Bailey speech at 8:40 am GMT
- China current account prelim for March 31
- U.K. NIESR monthly GDP tracker for April at 12:00 pm GMT
- Canada jobs data for April at 12:30 pm GMT
- U.S. Fed Kugler speech at 12:30 pm GMT
- U.S. Fed Goolsbee speech at 2:00 pm GMT
- U.S. Fed Williams speech at 3:30 pm GMT
- U.S. Fed Waller speech at 3:30 pm GMT
- Euro area ECB Schnabel speech at 11:45 pm GMT
- U.S. Fed Hammack speech at 11:45 pm GMT
- U.S. Fed Musalem speech at 11:45 pm GMT
- U.S. Fed Cook speech at 11:45 pm GMT
European traders will likely be watching BOE Governor Bailey’s speech closely after the BOE’s recent surprise rate cut vote, while Canada’s jobs report could influence CAD price action amid rising recession fears.
In the U.S., a packed slate of FOMC speakers may stir USD volatility as markets look for policy clues following trade war developments.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!