Canada GDP, Core PCE Price Index, UoM Consumer Sentiment

The EUR/USD rallied sharply on Thursday ending the session 1.31% higher. The move was driven by a wave of weaker-than-expected U.S. economic data that pressured the U.S. Dollar and pushed Treasury yields lower.

Investor sentiment turned cautious after U.S. initial jobless claims rose to 240,000 for the week ending May 24, up from 226,000 and above market expectations of 230,000. At the same time, the second estimate of Q1 2025 GDP showed a surprise contraction of -0.2% quarter-over-quarter — a sharp downgrade from the initial 2.4% expansion, signaling that the economy may be losing momentum.

Markets quickly adjusted expectations for Federal Reserve policy. Fed funds futures now price in nearly 50 basis points of rate cuts by year-end, as traders grow more confident that a softening economy will force the Fed to ease policy.

In the Eurozone, Thursday’s calendar was quiet, but attention will turn to key economic reports on Friday. Germany is set to release April Retail Sales and preliminary May inflation data, while Italy will also publish CPI figures.

Adding to the broader narrative, the U.S. Court of International Trade ruled this week that the Trump administration improperly used a 1977 statute to justify tariffs on dozens of countries. The decision could reignite trade tensions and prompt further legal and political scrutiny over past protectionist measures.

Gold prices rebounded strongly on Thursday, climbing from weekly lows to above the $3310 level as soft U.S. economic data and a major court decision on tariffs drove renewed demand for safe-haven assets.

In a significant legal development, the U.S. Court of International Trade ruled late Wednesday that the Trump administration unlawfully invoked a 1977 law to impose tariffs on dozens of countries. The court said the so-called “Liberation Day” tariffs — justified on national security grounds — were illegal, lifting trade restrictions on Mexico, Canada, and China.

Although key tariffs on aluminum, autos, and steel remain in place, the court's decision triggered a risk-on rally across global equity markets and added to the downward pressure on the U.S. Dollar. The Trump administration is appealing the ruling, and analysts at Goldman Sachs expect that broader tariff policy could persist through alternative legal frameworks.

Further supporting bullish sentiment, data revealed that U.S. gold exports to Switzerland surged to their highest level since at least 2012 in April, pointing to strong international demand for bullion amid rising macroeconomic uncertainty.

All eyes are now on Friday’s release of the Core Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation gauge — which is expected to show a slight moderation in price pressures. A softer reading could solidify expectations for Fed rate cuts, potentially providing further upward momentum for gold.

Oil prices retreated more than 2% on Thursday, reversing earlier gains, as investors digested a U.S. court ruling that blocked key Trump-era tariffs and weighed ongoing uncertainties around global demand, geopolitical tensions, and OPEC+ supply policy.

Prices had initially climbed following a U.S. Court of International Trade decision on Wednesday, which ruled that former President Donald Trump had exceeded his authority in imposing broad-based import tariffs. However, the court did not rule on industry-specific measures such as those targeting steel, aluminum, and autos.

The early rally faded as Trump administration officials downplayed the ruling’s broader implications and signaled the potential use of alternative legal frameworks to maintain key protectionist measures.

Further weighing on sentiment, International Energy Agency (IEA) Executive Director Fatih Birol warned of weak oil demand from China and uncertainty surrounding developments in Russia and Iran.

Investors also monitored diplomatic efforts between the U.S. and Iran aimed at reviving the 2015 nuclear agreement. Tensions remain elevated, with market participants reacting to shifting headlines around the prospects of either a renewed deal or escalating conflict.

Attention now turns to the upcoming OPEC+ meeting, where the group is expected to consider accelerating output increases beginning in July.

Oil prices trimmed losses late in the session after the U.S. Energy Information Administration (EIA) reported a surprise draw in crude inventories.

U.S. stock index futures edged lower on Thursday evening after an appeals court reinstated the bulk of former President Donald Trump’s sweeping trade tariffs, dampening investor hopes of a judicial rollback. Meanwhile, enthusiasm around Nvidia’s earnings-fueled surge faded in after-hours trade, dragging on the broader tech sector.

Wall Street finished Thursday’s session higher, but well-off intraday peaks, as markets digested the implications of the appeals court ruling. The decision effectively reversed a lower court order issued just one day earlier that had directed an immediate halt to Trump’s tariff program.

Investors had initially interpreted the trade court’s ruling as a potential turning point in the ongoing trade policy uncertainty, raising hopes of a gradual de-escalation in tariff tensions. However, the swift reversal by the appeals court tempered that optimism, reaffirming the persistence of trade-related risks.

Market participants also turned cautious ahead of the April Core Personal Consumption Expenditures (PCE) Price Index report due Friday, the Federal Reserve’s preferred inflation measure.

Markets will be closely watching Friday’s PCE inflation data for further clues on the Federal Reserve’s policy path. Meanwhile, the renewed legal backing for Trump-era tariffs adds another layer of uncertainty for equities, particularly in sectors sensitive to international trade.