Market Update 01/05/2025

Forex Market

USD: Resilient Despite Mixed Macro Signals

The US dollar remained broadly supported overnight, buoyed by a series of stronger-than-expected inflation indicators and modest resilience in consumption data, despite weaker GDP and employment prints. Q1 GDP unexpectedly contracted by -0.3% (vs +2.4% prior), but Core PCE inflation rose to 3.5% (vs 3.1% est), and personal spending beat forecasts at +0.7%, giving the greenback a boost across major pairs.

This strength saw AUD/USD dip to 0.6357, NZD/USD below 0.5900, GBP/USD to 1.3310, and EUR/USD as low as 1.1323. USD/JPY climbed above 143.20, reflecting broad USD momentum.

Later data including the Chicago PMI (44.6 vs 45.9 est) and Canada’s February GDP (-0.2% MoM) added some softness to the narrative but were largely shrugged off by FX markets.

AUD: Capped by USD Momentum

AUD/USD traded in a relatively tight 0.6357–0.64175 range, ending near 0.6400 ahead of the Sydney open. Commodity support helped offset some USD strength, but topside remains capped unless risk sentiment improves.

Key Economic Data Ahead (Sydney Time)

Markets will closely monitor Powell’s tone. A dovish lean could unwind some USD strength, while hawkish signals could reinforce recent gains.

General Market

Wall Street opened lower, weighed by soft economic signals. The Dow Jones fell over 1% in early trade before trimming losses to +0.4% by close. The Nasdaq slipped 0.1%, and the S&P 500 edged up 0.1%.

European equities fared better with the CAC +0.5%, FTSE +0.4%, and DAX +0.3%, supported by solid French and Eurozone GDP readings.
Oil markets remained under pressure, with Brent crude dipping to $63.10/bbl (-1.8%), and U.S. 10-year yields steady at 4.16%.

Key Headlines to Watch

U.S.– China Trade Dialogue: Treasury Secretary Bessent reiterated that resolving the tariff dispute with China remains a priority, but no concrete timeline was offered. Markets are watching for follow-up statements that could shift sentiment around trade-linked currencies like AUD and CNH.

ECB Signals Possible June Rate Cut: ECB official Holzmann hinted at more clarity by June regarding rate policy, increasing speculation around Eurozone monetary easing. EUR remains sensitive to upcoming inflation data.

Canadian Growth Misses Expectations: Canada’s February GDP came in at -0.2% MoM (vs. 0.0% expected), raising concerns about North American growth divergence. USD/CAD reacted with a short-term spike but retraced as oil steadied.

Here are the latest mid-market rates: