Global risk sentiment improved as soft US CPI data, trade optimism from Trump-Xi talks, and strong earnings from major tech companies helped lift investor confidence. Market attention also focused on four central banks meeting this week, with expectations of rate cuts in the US and Canada and policy holds elsewhere, while geopolitical tensions and government shutdown worries remained on traders’ radar.
FX Market reactions
- US Dollar: The dollar traded largely sideways but weakened late in the week as soft inflation readings, trade deal optimism, and FOMC anticipation weighed on demand.
- Japanese Yen: Yen firmed, supported by diplomatic progress in Tokyo and safe- haven flows as traders prepared for central bank outcomes.
- Euro & Sterling: Euro continued to gain on supportive ECB signals and improved data. The pound rebounded modestly after weeks of underperformance, with UK data beating low expectations.
- Commodity FX: AUD and CAD rose on hopes for a US-China trade deal and higher spot commodity prices, while emerging market currencies tracked risk sentiment higher.
Commodities Market reactions
- Gold & Silver: Gold reversed lower, breaking a multi-week rally as safe-haven demand cooled on easing trade friction and lower CPI. Silver also tracked gold into negative territory.
- Oil & Grains: Crude oil posted modest gains, buoyed by OPEC supply discipline and improved US demand, while grain prices rallied sharply on supply shocks and speculative inflows.
- Industrial Metals & Strategic Materials: Price action was mixed. Uranium and rare earth minerals saw volatility on resource nationalism and supply chain concerns, while copper and aluminium gained on global manufacturing optimism.
Indices Market reactions
- US Equities: Tech led Wall Street to new records, with the Dow, S&P 500 and Nasdaq all rallying on AI sector strength, earnings momentum, and trade optimism. Volatility remained contained even as yields pushed higher.
- Europe: European indices inched higher while defensive equities and manufacturing names stabilised, supported by energy cost relief and broadening sector rotation.
- Asia-Pacific: Asian equities were firm, buoyed by China stimulus headlines, steady yen, and strong Japan performance as buybacks and governance reforms continued to attract global capital.
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