European shares barely moved on Tuesday as investors reviewed corporate earnings, watched for possible tariff changes, and waited for the U.S. Federal Reserve’s policy decision later this week.
Market sentiment does appear to be holding steady, and this is a welcome sign following weeks of swings between risk-on and risk-off. It appears markets are more prepared to deal with remarks and comments from US President Trump which had been a major driving force of sentiment since the start of his Presidential term.
The US administration continues to tout trade deals which as of now have yet to materialize. Investors remain uneasy due to the absence of clear details about deals between the U.S. and its partners, especially after Trump announced new tariffs. On Sunday, President Trump announced a 100% tariff on foreign-made movies and said the next day that he plans to introduce pharmaceutical tariffs in the next two weeks.
For his part, US Treasury Secretary Scott Bessent called the U.S. the top choice for global investment and said Trump’s policies would strengthen that position, pushing back against last month’s “sell America” trend. The comments however have done little with both US Stock indices and the US Dollar struggling to gain any traction this week following last week’s improved performance.
On the FX front, the US Dollar looked to be over with last week’s positive close. However, Asian currencies have been on the offensive against the Greenback.
The shifts raise concerns for the dollar, as they indicate large amounts of money are flowing into Asia, weakening a major source of support for the dollar.
On Tuesday, things stabilized somewhat after Taiwan’s currency surged 10% in just two days. Meanwhile, Hong Kong’s dollar is nearing the upper limit of its peg, and the Singapore dollar is close to its highest level in over a decade.
EUR/USD is holding above the 1.1300 handle with positive PMI data this morning, barely moving the major. Is there room for another upside rally?
Currency Strength Chart, Strongest - Weakest: NZD, EUR, GBP, JPY, USD, CAD, AUD, CHF
Source: FinancialJuice
Gold prices have put in some excellent gains to start the week just as it appeared that bullish pressure may be dissipating. The precious metal reached an Asian session high of $3387/oz and held onto those gains as the European session got underway.
Oil prices rose by more than $1 per barrel on Tuesday. This was due to bargain hunters and technical factors after OPEC+ decided to increase production, which had caused a drop in prices the day before. However, worries about an oversupply in the market remain.
Economic Data Releases
From a data standpoint, Euro Area PMI for Germany came in better than expected this morning in a welcome boost for Europe’s most industrialized economy. Germany was joined by better-than-expected PMI data from France, Italy and the EU as a whole.
Looking toward the rest of the session we have Euro Area PPI data due in a short while as well as corporate earnings. Later we also have ECB policymaker Panetta speaking which could give more insights into the thoughts of the ECB on recent data and global trade tensions.
Chart of the Day - Gold
From a technical standpoint, the rise in gold this week should not come as a surprise.
Gold ended last week with what appeared to be sellers’ exhaustion as the pair failed to print a fresh low on Friday.
Yesterday’s massive bullish engulfing candlestick set the stage for the rally to continue today, with price action now hinting at fresh highs if the daily candle can close above the 3354.50 swing high.
Immediate resistance rests at 3380 before the 3400 and 3425 handles come into focus.
A pullback from here may find support at 3354 before the 3325 and 3300 handles come back into focus.
Gold Daily Chart, May 6, 2025
Source: TradingView.com