5 Key Market Moves This Week: Dollar Pullback, Stocks Mixed, and Gold Slips

Dollar Extends Pullback as Markets End Week in Mixed Mood
The markets wrapped up the week with a cautious tone as the U.S. dollar continued its retreat, equities posted modest gains, and gold extended its losses. Despite early optimism from recent trade developments, investors remain in a wait-and-see mode, carefully weighing trade progress and central bank policy signals.

Market Sentiment: Stabilizing but Cautious

The U.S. dollar came under renewed pressure on Friday, edging closer to erasing its weekly gains. Investors are becoming increasingly skeptical about sustained trade momentum, especially as the initial excitement around the U.S.-China truce fades. Still, there’s lingering optimism that the worst of the tariff war is behind us, even if progress is now slow.

However, with few fresh catalysts, traders remain on the sidelines. Uncertainty around Federal Reserve policy and the trajectory of global trade talks continues to keep risk sentiment subdued. As a result, most major currency pairs traded within tight ranges.

---

Stock Markets Hold Steady on Trade Deal Hopes

Despite the lack of clear direction, equities remained mildly supported, largely on optimism that new trade agreements could be on the horizon. Investors are interpreting the Fed’s silence as benign, focusing instead on the growing signs that the U.S. administration prefers deals over escalations.

Following preliminary trade agreements with the UK and China, India is expected to finalize a deal with the U.S. soon. Negotiations with Switzerland are also progressing. Success in these talks could further fuel risk appetite. However, discussions with Japan and the EU may drag on, with the next round of U.S.-Japan talks expected next week.

• Germany’s DAX is eyeing a new all-time high.

• S&P 500 has recovered all year-to-date losses and futures are trending higher.

In Asia, mixed performance prevailed:

• Alibaba’s earnings miss weighed on Hong Kong’s Hang Seng Index.

• Japan’s Nikkei 225 closed flat amid a larger-than-expected Q1 GDP contraction.

---

Yen Strengthens as Dollar Weakens

The Japanese yen strengthened significantly, recovering from early-week losses against the dollar. The rebound came despite weak Japanese GDP data and cautious comments from the Bank of Japan. Board member Nakamura warned against premature rate hikes in a slowing economy, but the fact that rate hikes are still being discussed is limiting downside pressure on the yen.

---

Monetary Policy: Fed Holds Interest Rates, Expectations for Rate Cuts Increase

Although U.S. economic data came in weaker than expected, the Fed has kept interest rates unchanged. According to Reuters, the market currently expects the Fed to start cutting rates by the end of this year, with the projected cut increasing from 49 to 57 basis points by December.

---

U.S. Economic Outlook: Slower Growth, Rising Risks of Recession

According to a report from Yahoo Finance, the U.S. economy slowed down in the first quarter of 2025, with GDP growth reaching only 0.3%, marking the first contraction in three years. This reflects the impact of tax policies and rising import costs.

Commodity Markets: Gold and Oil Slide

Gold reversed Thursday’s rebound and turned negative again on Friday, deepening its weekly losses. The cooling of trade tensions has dampened gold’s appeal as a safe haven. Meanwhile, hopes for a diplomatic breakthrough in the Russia-Ukraine conflict, with talks scheduled in Turkey, are not offering much support.

Oil prices also fell, amid signs that the U.S. and Iran may be nearing a deal to curb Iran’s nuclear program, which could bring more Iranian oil back to global markets.

---

Currency Spotlight: Kiwi Dollar Outperforms

Among major currencies, the New Zealand dollar was the standout performer, buoyed by a slight uptick in inflation expectations in the latest RBNZ quarterly survey.

---

Final Thoughts

The global markets are settling into a cautious rhythm as dollar weakness, trade negotiations, and central bank signals continue to shape the macroeconomic narrative. Investors are treading carefully, awaiting the next major driver — whether that be a breakthrough trade deal, a Fed policy shift, or stronger economic data.