Market’s performance on Thursday remains dicey, slightly upbeat of late, amid mixed trade headlines and caution ahead of U.S. President Donald Trump’s visit to the U.S. Federal Reserve (Fed). Also keeping traders cautious were news surrounding Russia-Ukraine and Iran-U.S. tensions, not to forget unimpressive figures of the preliminary July PMIs for major economies.
On Wednesday, Trump again blamed Fed Chairman Jerome Powell for the housing market slowdown after downbeat U.S. existing home sales. Though U.S. Treasury Secretary Bassent reaffirmed to traders that Trump doesn’t plan to remove Powell. Elsewhere, strong second-quarter (Q2) earnings from U.S. tech giants, apart from Tesla’s downbeat Earnings Per Share (EPS), weighed on the U.S. Dollar before Thursday’s corrective bounce.
U.S. President Trump cited the potential for 15% to 50% tariffs on major countries while mentioning progress in trade talks with the European Union (EU) and China. Even so, U.S. Bassent noted that trade talks with the EU were improving while warning Japan of a return to 25% U.S. tariffs if Trump doesn’t like the settlement of trade issues promised. Additionally, Bassent also conveyed his expectations of witnessing 1-2 Fed rate cuts in 2025, matching the Fed’s expectations, which in turn eased pressure on Powell and the central bank board.
White House economic advisor Peter Navarro criticized reports from the Financial Times (FT) suggesting a potential EU trade agreement. That said, FT recently unveiled that the EU is reportedly keeping trade retaliation on hand even if a deal with the US draws closer.
Russia’s Vladimir Medinsky, an aide to President Vladimir Putin, confirmed the finalization of all humanitarian agreements with Ukraine and tried to tame war fears. However, geopolitical tensions prevail as the U.S. State Department approves a potential $172 million sale of missile systems to Ukraine.
Elsewhere, European Commission President Ursula von der Leyen said that she had an excellent meeting with Chinese President Xi Jinping today. On the other hand, China president Xi sounded slightly offbeat while saying, “Current challenges facing the EU do not come from China.” It should be noted that Chinese diplomats conveyed their dislike for the EU sanctions on Beijing-based companies during their trade talks the previous day and challenged hopes of any deal soon.
Japan’s preliminary PMIs for July showed weak performance, while Australia’s numbers exceeded expectations. Furthermore, PMIs for the UK and Germany were also softer for July, but those from the EU flashed upbeat results and joined the European Central Bank’s (ECB) status quo to keep the US Dollar on recovery mode.
Talking about the Wall Street, Nasdaq and S&P 500 both closed at record highs, but the Dow Jones missed the all-time high (ATH) marked in 2024 by just four points. Upbeat earnings from Google’s parent Alphabet, ServiceNow, Chipotle, IBM, T-Mobile, and CSX favored equity buyers despite mixed sentiment. However, Tesla faced its largest quarterly revenue drop in over a decade and pushed CEO Elon Musk to express expectations of a rise in European sales.
Bitcoin (BTC/USD) and Ethereum (ETH/USD) remain pressured despite lacking downside momentum as traders keenly await the White House’s crypto report, scheduled for July 30, amid profit-booking. That said, Gold extends the previous day’s pullback from a six-week high, following a failure to cross a three-month horizontal resistance. Crude oil recovers after a three-day losing streak, following a higher-than-expected draw in U.S. crude inventories.
Bond yields continued to rise, and cryptocurrencies saw mixed performance after a solid week, as traders anticipate the White House’s cryptocurrency policy report, expected on July 30.
Amidst all of this, the U.S. Dollar Index (DXY) rebounds from the lowest level in two weeks while snapping a four-day losing streak.
Latest moves of key assets
- Gold extends pullback from five-week high, approaching weekly low while posting 1.0% intraday loss near $3,353.
- Bitcoin (BTC/USD) resists stretching Wednesday’s losses, down 0.30% intraday to $118,400 by the press time.
- Ethereum (ETH/USD) rebounds from weekly low to $3,650, up 0.45% intraday, following two-day losing streak.
- U.S. Dollar Index (DXY) bounces off a two-week low to print the first daily gain, so far, in five while rising 0.30% intraday to 97.52 at the latest.
- Wall Street closed positive: Nasdaq and S&P 500 hit fresh record highs, while Dow Jones gained slightly but missed ATH; U.S. futures and global stocks edged higher.
- WTI Crude gains 1.0% to $66.00, snapping three-day losing streak while bouncing off monthly low.
What Next?
Looking forward, the preliminary readings of the U.S. S&P Global PMIs for July will be the immediate catalyst to watch, but major attention will be on U.S. President Donald Trump’s visit to the Federal Reserve. The same highlights the hopes of witnessing a “Turnaround Thursday,” and a reversal in the weekly moves of major asset classes.
Should Trump choose to criticize Fed in his historical visit, the U.S. Dollar might witness downside pressure, which in turn can support gains in other major currencies and risk assets.
Cryptocurrencies, however, may not gain much as traders unwind hedged positions and adopt a more cautious stance ahead of the White House’s upcoming crypto policy announcement, due on July 30.
That said, the U.S. equities are likely to remain firm, in a reaction to mostly positive earnings reports from major technology companies, which in turn can challenge Gold sellers and exert downside pressure on the bond yields. It should be noted that any surprise escalation in the geopolitical tensions could join Trump’s latest retreat from firing Powell and likely upbeat U.S. data to help the U.S. Dollar extend early Thursday’s recovery and challenge other asset classes, mainly Gold and cryptocurrencies.
