Last week featured significant updates across the United States, Eurozone, Asia-Pacific, and Canada. The focus was on inflation trends, monetary policy decisions, and employment data, all of which shaped market sentiment across currencies, commodities, equities, and bonds.

Global Market Recap: What Moved the Markets

United States

Powell’s Speech
Fed Chair Jerome Powell reaffirmed a data-dependent policy stance, noting that upcoming decisions will rely on inflation and labor data. He also warned that tariff risks could fuel further price increases.

• Market Impact: Yields on U.S. Treasuries rose, the dollar index strengthened, and equity futures edged lower.
• Key Assets: USDX, USD pairs, U.S. Treasuries, SP500 futures

PMI Data – Manufacturing and Services
The ISM Manufacturing PMI fell to 48.5, marking the second straight month of contraction. Services PMI dropped to 49.9, falling below 50 for the first time since early 2023.

• Market Impact: Industrial-heavy indices underperformed, the USD strengthened as a safe haven, and copper prices declined.
• Key Assets: USD pairs, Copper, DJ30, NAS100

Employment Report – JOLTS, ADP, and NFP
JOLTS job openings decreased slightly. ADP data showed a gain of 180k jobs, while nonfarm payrolls came in below expectations at 139k. Unemployment ticked up.

• Market Impact: Equities showed hesitation, bond yields eased, and USD saw mixed reactions.
• Key Assets: USD pairs, U.S. Treasuries, SP500, BTCUSD

Euro Area

Eurozone Inflation (May Flash Estimate)
Headline inflation eased to 1.9% year-on-year, dipping below the ECB’s 2% target for the first time since September 2024. Core inflation held at 2.7%.

• Market Impact: EUR weakened, sovereign bond yields declined, and Eurozone equities outperformed.
• Key Assets: EURUSD, Eurozone Bonds, EU50, FRA40

ECB Rate Cut
The ECB cut its policy rate by 25 basis points to 3.50%, marking the eighth cut in a year. The central bank signaled a potential pause going forward.

• Market Impact: Rates rallied, EUR briefly stabilized, and banking stocks advanced.
• Key Assets: EUR Banks, Eurozone Bonds, EURUSD

GDP Growth (Q1)
Eurozone GDP rose by 0.4% quarter-on-quarter in Q1, surpassing expectations. Growth was driven by strong exports from Ireland and Spain.

• Market Impact: Equity indices rose, with cyclicals leading. Bond yields nudged higher.
• Key Assets: EU50, GER40, ES35, Eurozone Bonds

Labor Market
Unemployment remained at 6.2% in March, down from 6.5% a year earlier.

• Market Impact: EURUSD held steady; core bond yields edged slightly higher.
• Key Assets: EURUSD, Eurozone Bonds, EU50

Japan

Tokyo Core CPI (May)
Inflation surged to 3.6% year-on-year, the fastest since January 2023, due to high food prices.

• Market Impact: USDJPY fell by 0.3% as the yen strengthened on expectations of possible BOJ tightening.
• Key Assets: USDJPY, Nikkei225, JGB Futures

Australia

RBA Meeting Minutes
The Reserve Bank of Australia considered a 50 basis point cut but chose a more moderate 25 bps reduction to 3.85%. They signaled readiness to respond if U.S. tariff pressures escalate.

• Market Impact: AUDUSD dropped by 1%, bond yields declined, and equity futures softened.
• Key Assets: AUDUSD, ASX200 Futures, Australian Bonds

GDP (Q1)
The Australian economy grew just 0.2% quarter-on-quarter, slowing from 0.6% in Q4 due to stagnant government spending and cautious consumer behavior.

• Market Impact: AUD underperformed, long-term bond yields declined, and commodity currencies lagged.
• Key Assets: AUDUSD, Iron Ore, ASX200

Canada

Bank of Canada Rate Decision
The BoC held rates at 2.75%, citing trade policy uncertainty and signaling that future cuts remain possible if growth weakens.

• Market Impact: CAD dipped then recovered, ending the week at an eight-month high versus the USD.
• Key Assets: USDCAD, TSX, Oil

Ivey PMI (May)
The index rose to 48.9 but remained below the 50 mark. The employment sub-index rose above 51, hinting at hiring strength.

• Market Impact: USDCAD remained stable; Canadian equity futures weakened slightly.
• Key Assets: USDCAD, TSX Futures, CADJPY

Employment Report (May)
Canada added 8,800 jobs versus an expected decline, though unemployment rose to 7%, its highest level in nine years outside pandemic periods.

• Market Impact: CAD appreciated 0.4%, bond yields climbed in line with U.S. Treasuries.
• Key Assets: USDCAD, TSX, Oil, BTCUSD

Market Outlook: What to Watch This Week

Several critical economic reports are due this week. Each holds the potential to shape short-term market direction and trader sentiment.

Final Thoughts

Major economies are showing signs of slowing momentum even as pockets of inflation persist. Last week’s data underscored a bifurcated landscape: the U.S. labor market and services sector softening, euro-area inflation easing to target, and divergences in Asia between robust price pressures and tepid growth. Looking ahead, inflation reports and GDP readings will be pivotal in guiding central bank stances. Overall, markets may tread cautiously, with moderate volatility likely as traders parse each data release—remember, probabilities, not certainties, will drive decisions.

Disclaimer: This update is for informational and educational purposes only and does not constitute financial advice. Trading involves risk, always verifying critical information before making decisions.