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24/04/2025 - 07:47 UTCFollowing a significant recovery on Tuesday, the U.S. dollar index (USDX) extended its gains on Wednesday, moving 0.98% higher. This upward momentum was fueled by renewed optimism from U.S. President Donald Trump regarding trade negotiations with China. Trump expressed confidence in reaching a deal, which helped to alleviate concerns about escalating trade tensions and policy instability. Additionally, he addressed speculation about Federal Reserve Chair Jerome Powell's position, dismissing rumors of his potential dismissal while reiterating his desire for lower interest rates.
European stock markets experienced robust gains on Wednesday, with the Germany 40 index climbing by 2.16%, the Europe 50 surging by 2.13%, and the France 40 advancing by 1.63%. This rally was initially fueled by receding concerns regarding a potential trade war between the U.S. and China. However, this relief proved to be short-lived, as the upward momentum stalled. Investors began to reconsider the recent optimism surrounding a possible de-escalation in the tariff dispute between the world's two largest economies. Analysts at Deutsche Bank noted that while President Donald Trump's newly implemented tariffs have undoubtedly heightened recessionary fears in recent weeks, the market has not fully embraced this pessimistic outlook.
The European Q1 earnings season is busy, with numerous major companies reporting results. STMicroelectronics anticipates better Q2 earnings, considering Q1 its low point for the year. Unilever surpassed Q1 underlying sales growth expectations and confirmed its full-year 2025 outlook. Benefiting from recent launches, Renault's Q1 revenue slightly exceeded forecasts with a 0.6% increase. Thanks to strong investment bank sales, BNP Paribas' Q1 earnings met expectations, and the bank maintains its profit outlook despite a weakening economy. In contrast, Nokia's Q1 profit fell short of market expectations, noting a temporary disruption from U.S. tariffs.
Regarding U.S. talks with Japan that have initiated last week, while the USD/JPY exchange rate is a key topic, U.S. Treasury Secretary Scott Bessent stated that the U.S. has "no currency targets" ahead of a meeting with Finance Minister Katsunobu Kato. Key discussion points include tariffs, non-tariff trade barriers, currency manipulation, and government subsidies. The U.S. has imposed tariffs on Japanese exports, including a 25% duty on cars, currently suspended until July, and a universal 10% rate. The Japan 225 showed little change on Wednesday’s session, hovering close to three-week highs.
U.S. equities presented a mixed picture on Wednesday, with earlier gains being trimmed late in the session. Initial optimism regarding U.S.-China trade negotiations, fueled by reports of potential tariff reductions, drove the early rally. However, comments from U.S. Treasury Secretary Scott Bessent later tempered these expectations, clarifying that no unilateral tariff reduction offer had been made. In corporate news, Tesla shares saw a significant surge following stronger-than-expected earnings in its core auto business, while Intel also rallied on news of workforce reductions aimed at improving efficiency. Boeing's stock experienced a notable gain following its first year-over-year quarterly revenue growth since 2023.
In the cryptocurrency market, both Bitcoin and Ethereum experienced significant gains on the weekly chart as of Wednesday. Bitcoin surged to a seven-week high, propelled by U.S. President Donald Trump's decision to no longer threaten the dismissal of Fed Chair Jerome Powell and his indication of possible reductions in trade tariffs on China. By 08:30 AM GMT on the iFOREX platform, Bitcoin and Ethereum were trading considerably higher on the week, with gains of 8.59% and 9.37% respectively, reaching their highest levels since early March. This positive momentum contributed to a substantial increase in the overall cryptocurrency market capitalization that is seen approaching three trillion.
For Thursday, market attention could be drawn to U.S. Jobless Claims, Core Durable Goods Orders, Existing Home Sales, and quarterly earnings numbers from Google parent Alphabet.
The EUR/USD pair extended its losses on Wednesday, retreating further from its recent high of 1.15736—its strongest level in over three years.
The Greenback found support following renewed optimism from US President Donald Trump regarding ongoing trade negotiations with China. Trump expressed confidence that a deal could be reached, easing fears of escalating tensions and policy instability. He also pushed back against speculation that he intends to dismiss Federal Reserve Chair Jerome Powell, though he reiterated frustration over the Fed’s decision to maintain interest rates.
The Euro's decline was further exacerbated by disappointing economic data from the Eurozone. Preliminary April figures from the Hamburg Commercial Bank (HCOB) showed a slowdown in overall business activity.
The surprise came largely from the services sector, where the PMI fell to 49.7 against expectations of a modest expansion to 50.5. Meanwhile, the manufacturing sector remained in contraction but showed a slight improvement, with the PMI rising to 48.7 from 48.6, beating expectations of 47.5.
Adding to the downbeat sentiment, flash PMI data from S&P Global also pointed to a cooling economic environment. The Services PMI came in at 51.4, missing expectations of 52.8, while the Manufacturing PMI improved to 50.7, defying forecasts of a decline to 49.4.
Gold prices dropped on Wednesday, as risk appetite returned to global markets amid signs of easing US-China trade tensions and reassurances from US President Donald Trump regarding Federal Reserve leadership.
The shift in market sentiment was triggered by reports suggesting that the United States may consider reducing tariffs on Chinese imports. This news boosted US equities and diminished the appeal of safe-haven assets like gold.
In a separate development, President Trump publicly addressed speculation regarding Federal Reserve Chair Jerome Powell’s job security. Trump dismissed rumors of an impending dismissal, stating, “The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in his idea to lower interest rates.”
Looking ahead to the upcoming Federal Reserve policy meeting, market expectations remain firmly anchored around a pause in rate adjustments. According to data from Prime Market Terminal, traders currently assign a 94% probability that the Fed will keep interest rates unchanged at its next meeting.
Oil prices declined on Wednesday as reports emerged suggesting that OPEC+ may accelerate output increases as early as June. However, the losses were partially offset by news that the United States may consider reducing tariffs on Chinese imports, which improved broader market sentiment.
According to three sources familiar with the matter cited by Reuters, several OPEC+ members are expected to propose another consecutive increase in oil production at the group's June meeting.
Oil prices pared some losses after Kazakhstan’s Energy Ministry released a statement affirming the country’s commitment to the OPEC+ agreement.
Oil prices also found support from U.S. inventory data released midweek. While crude stockpiles posted an unexpected build, gasoline and distillate inventories fell more than forecast, signaling ongoing strength in product demand.
Meanwhile, geopolitical tensions remain in focus. The U.S. has announced new sanctions targeting a key Iranian shipping executive involved in transporting Iranian liquefied petroleum gas and crude oil, part of ongoing efforts to curb Tehran’s oil revenues.
U.S. equities posted a mixed picture on Wednesday as earlier gains were trimmed late in the session after U.S. Treasury Secretary Scott Bessent tempered expectations for a swift resolution to the ongoing U.S.-China trade standoff.
The rally was driven earlier in the day by speculation of progress in U.S.-China trade negotiations, following reports that President Donald Trump might consider reducing tariffs on Chinese imports. However, momentum faded after Secretary Bessent clarified that no unilateral offer had been made by the U.S. to lower tariffs, casting doubt on earlier headlines from The Wall Street Journal.
In corporate news, Tesla shares surged over 5% after the EV giant delivered stronger-than-expected core auto business earnings in the first quarter. Sentiment was further lifted by news that CEO Elon Musk plans to scale back involvement with the Trump administration to refocus on Tesla operations, following a period of sluggish vehicle sales.
Intel rallied over 5% after Bloomberg reported the chipmaker will announce workforce reductions exceeding 20% as part of a restructuring effort to streamline operations and improve efficiency.
Boeing posted a 6% gain following its first year-over-year quarterly revenue growth since 2023, offering investors fresh optimism on a recovery in the aviation sector.
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