- Risk sentiment turns positive as Trump back-tracks on Powell.
- Stock markets rally and Treasury yields sink
- US dollar rallies but CAD and MXN outperform
USDCAD: open 1.3805, overnight range 1.3798-1.3861, close 1.3815, WTI 64.54, Gold 3318.08
The Canadian dollar has whip-sawed in a 1.3780-1.3860 range since Monday with traders struggling to find direction. The Canadian election has been largely ignored as the focus is on Trump.
President Trump appeared to realize that his aggressive stance toward Fed Chair Jerome Powell and the steep tariffs slapped on Chinese imports were destabilizing global markets. With equity indices, bond yields, and the US dollar all tumbling, he made a sharp pivot. In a press statement, he remarked that he’d like Powell to be “more active” in lowering rates but clarified he had “no intention” of removing him from the role—a stark contrast to last week when he openly called for Powell’s ouster, labeling him a “loser” and “Mr. Too Late.”
Trump also hinted at a softening of his trade war stance, admitting that the 145% tariffs on Chinese goods were “very high” and would likely be reduced significantly.
US equity markets surged, with the NASDAQ jumping 2.71%. The rally extended into Asia, where Japan’s Topix climbed 2.06%, Australia’s ASX 200 rose 1.33%, and Hong Kong’s Hang Seng gained 2.37%. European bourses followed suit, with Germany’s DAX up 3.07% and France’s CAC 40 adding 2.45%. S&P 500 futures advanced 2.14%.
Gold didn’t fare as well. After spiking to 3500 on safe-haven flows, XAUUSD sank to 3329.00, erasing most of the week’s rally. The 10-year US Treasury yield also fell, dropping from 4.43% to 4.31%.
EURUSD traded in a 1.1308–1.1440 range, retreating sharply early in the session after Trump adopted a more conciliatory tone toward Fed Chair Powell. Treasury Secretary Bessent added to the optimism, suggesting US-China trade tensions may soon ease. The dip to 1.1308 attracted buyers, sparking a steady rebound. Meanwhile, Germany’s Manufacturing PMI slightly beat forecasts at 48.0 but still declined from March’s 48.3 reading. Hamburg’s Chief Economist, Dr. Rubia, noted that the impact of US tariffs hasn’t significantly disrupted the manufacturing sector—at least not yet.
GBPUSD ranged between 1.3234 and 1.3339 as traders responded to the same Trump-Bessent commentary. The pair initially fell before stabilizing in a tight band. Weak UK PMI numbers didn’t help sentiment.
USDJPY moved between 141.47 and 143.22, bouncing strongly from its recent lows. The pair surged as risk appetite improved, prompting a reversal of safe-haven flows into the yen. Ongoing trade discussions between the US and Japan are also keeping the currency pair supported.
AUDUSD traded in a 0.6350–0.6425 band. The Australian dollar initially slipped after PMI figures showed a drop to 51.7 in April from 52.1 previously. However, a shift in tone from Trump regarding tariffs on China and his softened stance toward Powell sparked renewed demand for risk, driving the pair higher.
