From Trade Tensions to PMIs: Markets Brace for Friday’s Finale

Good morning, traders. As we head into the final trading day of the week, markets are reflecting on a whirlwind of activity that has shaped sentiment over the past few days. Thursday brought notable movements, driven by a mix of macroeconomic data and lingering trade concerns, while Friday promises to cap off an eventful week with a busy calendar of PMI data and reactions to yesterday’s key developments.

Thursday saw the Canadian dollar under renewed pressure following disappointing retail sales data. This came on the heels of an already challenging week for the loonie, which has been weighed down by fears of escalating trade tensions sparked by earlier remarks from Donald Trump about potential tariffs on Canada. The combination of weak data and geopolitical uncertainty kept the Canadian dollar subdued, making it one of the weakest performers this week. At the same time, the U.S. dollar also faced downward pressure, with traders showing a preference for safer havens and European currencies.

The Bank of Japan dominated headlines on Thursday with its widely anticipated decision to raise interest rates. Governor Ueda’s comments following the announcement provided crucial insights into the central bank’s outlook. He emphasized a shift in policy focus, stating that future rate hikes will hinge more on price movements than economic growth. This nuanced approach, coupled with his observation that Japan’s economy is recovering moderately and inching closer to the 2% inflation target, added a layer of optimism to the yen, which strengthened further against its peers.

Meanwhile, European markets maintained their bullish tone, with indices like the DAX flirting with all-time highs. Positive PMI surprises from France and Germany fueled optimism about the region’s economic resilience, further supporting the euro and strengthening sentiment in European equity markets. The story in the commodities sector was more mixed. Oil attempted to recover from a difficult week but remained under pressure, while gold and silver rebounded strongly after a sharp midweek pullback, finishing Thursday on a positive note.

As for Friday, the day’s focus will be on PMI releases from the UK and the U.S., which could inject fresh volatility into the markets. European currencies are expected to retain their momentum, buoyed by Thursday’s strong data, while the spotlight will remain on North American currencies, particularly the Canadian dollar, which has struggled to find its footing this week. Additionally, ongoing scrutiny of Trump’s comments regarding trade policies continues to loom over markets, influencing sentiment across currencies, commodities, and equities.

Source: https://www.axiory.com/analytics/market-news/from-trade-tensions-to-pmis-markets-brace-for-frid