FOMC Meeting Minutes, Richmond Manufacturing, Nvidia Earnings

The euro fell below 1.1340 on Tuesday, down over 0.40%, as the US Dollar regained momentum, supported by a robust rebound in consumer confidence and diverging inflation dynamics between the US and Europe.

A key driver behind the euro's decline was a strong surge in US Consumer Confidence. The Conference Board's index rose to 98.0 in May, the highest level since 2021, signaling renewed optimism among American consumers.

Durable Goods Orders fell 6.3% month-over-month in April, their steepest decline since October 2020. However, the figure was slightly better than expectations of a 7.8% drop.

In the eurozone, inflation data out of France added further pressure on the shared currency. The Harmonized Index of Consumer Prices (HICP) rose just 0.6% year-over-year in May—down from 0.9% in April and below forecasts.

ECB policymaker Gediminas Šimkus indicated support for a potential rate cut in June, citing disinflationary progress. However, opinions within the central bank remain divided. Austrian central bank governor Robert Holzmann pushed back on expectations, telling the Financial Times he sees "no reason" for cuts at upcoming policy meetings.

The EU Economic Sentiment Indicator improved in May for the first time in three months, while Germany's GfK Consumer Sentiment Index for June edged up to -19.9 from -20.8. However, the increase fell short of expectations and reflected growing consumer caution, particularly regarding future spending.

Markets have now fully priced in a 25 basis-point rate cut by the ECB at its upcoming meeting, which would lower the Deposit Facility Rate to 2%.

Gold prices declined sharply on Tuesday, dropping more than 1% as improved market sentiment and a stronger US Dollar weighed on the safe-haven metal. The retreat comes after US President Donald Trump postponed planned tariffs on European Union goods, easing trade tensions and boosting investor confidence.

The shift in sentiment followed a weekend call between President Trump and European Commission President Ursula von der Leyen, during which the US agreed to delay imposing 50% tariffs on a range of EU imports until July 9. The move sparked a global rally in equities and reduced demand for traditional safe-haven assets such as gold—though the US Dollar bucked the trend and rallied.

Adding to the positive momentum, reports indicated that Washington may soon finalize a trade agreement with India.

Despite the bullish sentiment in broader markets, not all US data was upbeat. April Durable Goods Orders dropped significantly—the largest monthly decline since October 2020—largely due to a sharp pullback in business equipment investment.

Looking ahead, gold traders are likely to remain cautious as they await several key US economic releases that could shape the near-term direction of monetary policy and influence market sentiment.

With risk appetite improving and the dollar on firmer footing, gold may remain under pressure in the short term—particularly if upcoming data reinforces expectations of a steady Fed policy path and further reduces demand for non-yielding assets.

Oil prices edged lower on Tuesday as investors weighed the potential for increased global supply amid progress in US-Iran nuclear negotiations and expectations of a production hike by OPEC+ later this week.

The losses reflected mounting concerns about a possible oversupply in the market, should Iranian barrels return and the OPEC+ alliance approve additional output.

While no major changes are expected from Wednesday’s OPEC+ policy meeting, three delegates told Reuters that the group is likely to agree on a further acceleration in output during a follow-up meeting on Saturday. The move would add to global supply at a time when demand remains uneven and geopolitical uncertainty is high.

Investors also monitored the outcome of the fifth round of US-Iran talks, held in Rome last week. While limited progress was made, key disagreements—particularly over Iran’s uranium enrichment program—remain unresolved. The outcome will be critical as failure would keep Iranian oil under sanctions, while any breakthrough could add significant supply to global markets.

Offsetting some of the downward pressure, US President Donald Trump’s decision to delay new tariffs on European Union goods until July 9 helped lift sentiment, reducing fears of a slowdown in global fuel demand. Additional support came from Canada, where a wildfire in Alberta temporarily disrupted oil and gas production.

US equities rallied sharply on Tuesday as a strong rebound in consumer confidence and the postponement of steep tariffs on European Union goods helped ease investor concerns over the health of the economy and international trade relations.

At the close, the US 30 rose 0.91% the US 500 climbed 0.99%, and the US Tech 100 surged 1.11%. Markets reopened Tuesday after being closed Monday for the Memorial Day holiday.

Investor optimism was buoyed by May’s Consumer Confidence Index, which posted its largest monthly gain in four years.

Both the Expectations Index and Present Situation Index showed notable improvements, reflecting a broad pickup in sentiment.

Technology stocks led Tuesday’s advance, with Nvidia  gaining over 3% ahead of its highly anticipated earnings report due Wednesday. As a key supplier to AI infrastructure and a barometer of global demand for advanced chips, Nvidia’s results are being closely watched by investors.

Tesla rose more than 7% after CEO Elon Musk reassured shareholders of his commitment to the company, saying he would be “super focused” on Tesla and his AI venture xAI, while also highlighting next week’s planned Starship launch.

Global markets also reacted positively to news that President Donald Trump agreed to delay proposed 50% tariffs on EU imports until July 9 following discussions with European Commission President Ursula von der Leyen.

While Tuesday’s rally was fueled by easing trade tensions and stronger consumer data, markets remain sensitive to any developments on the geopolitical front.