The major assets saw mixed price action on Thursday as investors priced in U.S. fiscal concerns following the House passage of Trump’s tax bill, which sent Treasury yields initially surging before they pulled back on bargain hunting.
While stocks finished largely flat and the dollar gained modestly, gold retreated from safe-haven demand, oil declined on supply concerns, and Bitcoin continued its record-breaking rally above $111,000.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- US Treasury Dept said Scott Bessent and Japan Finance Minister Katsunobu Kato did not discuss foreign exchange levels during a meeting in Canada
- BOJ Gov. Ueda said they will closely monitor the bond market amid surging yields on super-long Japanese government bonds
- Australia S&P Global flash manufacturing PMI for April: 51.7 (51.7 previous); Services PMI at 50.5 (51.0 previous)
- Japan Jibun Bank manufacturing PMI flash for May: 49.0 (48.5 forecast; 48.5 previous); Services PMI at 50.8 (51.2 forecast; 52.2 previous)
- U.K. public sector net borrowing ex banks for April: -20.16B (-18.0B forecast; -16.44B previous)
- Germany HCOB manufacturing PMI flash for May: 48.8 (49.1 forecast; 48.4 previous); Services PMI at 47.2 (49.9 forecast; 49.0 previous)
- Germany Ifo business climate for May: 87.5 (87.5 forecast; 86.9 previous)
- Euro area HCOB manufacturing PMI flash for May: 49.4 (49.2 forecast; 49.0 previous); Services PMI at 48.9 (50.5 forecast; 50.1 previous)
- U.K. S&P Global manufacturing PMI flash for May: 45.1 (46.0 forecast; 45.4 previous); Services PMI at 50.2 (49.3 forecast; 49.0 previous)
- U.K. CBI industrial trends orders for May: -30.0 (-30.0 forecast; -26.0 previous)
- US House passes Trump “One Big Beautiful” tax and spending mega-bill
- Canada CFIB business barometer for May: 40.0 (34.6 forecast; 34.8 previous)
- Bloomberg reported that OPEC+ members are discussing another 411,000 output hike in July
- Canada raw materials prices for April: -3.0% m/m (-2.0% m/m forecast; -1.0% m/m previous); -3.6% y/y (-3.2% y/y forecast; 3.9% y/y previous)
- Canada PPI for April: 2.0% y/y (2.7% y/y forecast; 4.7% y/y previous); -0.8% m/m (-0.3% m/m forecast; 0.5% m/m previous)
- U.S. initial jobless claims for the week ending May 17: 227.0k (231.0k forecast; 229.0k previous)
- U.S. Chicago Fed national activity index for April: -0.25 (-0.2 forecast; -0.03 previous)
- U.S. S&P Global manufacturing PMI flash for May: 52.3 (50.3 forecast; 50.2 previous); Services PMI at 52.3 (51.0 forecast; 50.8 previous)
- U.S. existing home sales for April: -0.5% m/m (0.7% m/m forecast; -5.9% m/m previous)
- U.S. Kansas Fed manufacturing index for May: -10.0 (-1.0 forecast; -5.0 previous)
- FOMC voting member Christopher Waller sees a rate cut in H2 2025 if tariffs are closer to 10% by July
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Concerns over U.S. debt piled on Thursday after Trump’s tax cut bill cleared the House, potentially adding $3.8 trillion to the $36.2 trillion national debt over the next decade. The bill not only extends the 2017 Trump tax cuts, but also introduces fresh breaks for tips and car loans while ramping up military and border spending.
The decision triggered a bond selloff that briefly pushed 30-year yields to 5.16% before they eased to 5.09%. U.S. 10-year bond yield touched its highest level in more than three months early on before slipping to 4.53% by the close, likely as bargain hunters stepped in.
U.S. stocks started strong but lost momentum into the close. The S&P 500 finished flat at 5,844 after some intraday support from falling bond yields European stocks didn’t fare much better as they took hits after weak PMI data showed the Eurozone contracting again, with the composite reading dropping to 49.5 from 50.4 in May.
Gold fell from $3,340 to $3,295 as stabilizing U.S. dollar demand and US10Y dampened safe-haven demand. Oil also edged lower, with WTI crude slipping to $60.75 on talk of another OPEC+ production hike and rising U.S. inventories. Bitcoin bucked the trend, surging to new record highs above $111,000 in its fifth consecutive day of gains.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Major Currencies Chart by TradingView
The U.S. dollar started Thursday on the back foot during Asian trading after news broke of U.S.-Japan finance minister talks. Markets read the move as potentially dovish for the dollar, sending USD/JPY lower despite strong Japanese machinery orders offering some support. Lingering concerns around U.S. fiscal health following Moody’s downgrade also weighed on the Greenback.
The European session marked a dramatic turnaround for dollar strength as weak PMI data across the eurozone triggered increased demand for USD. The Eurozone composite slipped to 49.5 from 50.4, while Germany’s services PMI hit a 30-month low of 47.2. In the U.K., manufacturing fell to 45.1, the sharpest drop in nearly two years. These disappointing readings likely drove investors toward the relative safety of the U.S. dollar against European currencies.
Dollar strength picked up further during the U.S. session after the House passed Trump’s tax bill, which could tack on another $3.8 trillion to the national debt over the next decade. The move sent Treasury yields to three-month highs, adding fuel to the dollar’s rally. Gains later cooled as yields pulled back, likely due to bargain hunters stepping in. Still, the dollar index closed 0.2% higher, underscoring its safe-haven appeal in a shaky global backdrop.
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. Fed balance sheet for May at 8:30 pm GMT
- New Zealand retail sales q/q for Q1 2025 at 10:45 pm GMT
- U.K. GfK consumer confidence for May at 11:01 pm GMT
- Japan inflation data for April at 11:30 pm GMT
- Germany final GDP for Q1 2025 at 6:00 am GMT
- U.K. retail sales for April at 6:00 am GMT
- France consumer confidence for May at 6:45 am GMT
- Euro area ECB Lane speech at 8:30 am GMT
- Canada retail sales for April at 12:30 pm GMT
- U.S. new home sales for April at 2:00 pm GMT
- Euro area ECB member Schnabel speech at 4:00 pm GMT
- U.S. Fed Cook speech at 4:00 pm GMT
- U.S. Baker Hughes oil rig count for May 23 at 5:00 pm GMT
The European session kicks off with high-impact data from Germany and the UK, where weak retail or GDP figures could reinforce ECB and BOE rate cut expectations, keeping euro and pound bulls cautious.
Later in the U.S. session, all eyes will be on Canada’s retail sales and U.S. housing data, with central bank speakers like Schnabel and Cook adding potential headline risk for dollar pairs.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
