US dollar’s fate tied to incoming US data 

Risk appetite improves, focus shifts to today’s US data; Strong data prints to keep next week’s Fed dovishness in check; Trump to speak at various events, keeping market participants on their toes; Gold and bitcoin range-trade, oil falls below $60;
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The improved risk sentiment may be tested today

Risk appetite continues to improve, with US equity indices recording their sixth consecutive green session yesterday. This is the longest streak of positive daily performance since late November 2024, when the markets were feeling exuberant following Trump’s win in the US Presidential election. At the same time, the dollar has failed to make any gains against the euro, but dollar bulls might take solace in the fact that the recent underperformance has probably concluded.

With the US President reaching the 100-days mark since taking office on January 20, the focus today shifts to the US economy. There is a plethora of US data that could shape up next week’s FOMC meeting, but, more importantly, confirm or ease investors’ fears about the immediate growth outlook.

Key US data on the menu today

Economists have penciled in a weak 0.3% QoQ growth increase for the first quarter of 2025, which is miles below the Q4 number of 2.4%. On the flip side, the GDP deflator is seen rising to 3%, which is the highest print since the first quarter of 2024. Personal consumption data will also be closely scrutinized, with consumer spending attracting extra interest in an effort to gauge the US consumers’ response to March’s tariff shenanigans.

The ADP employment report will also be released at 12:15 GMT. An increase of 115k is expected, with the chances for a surprise on either side equally balanced. This is the first key labour market-related figure for April - with nonfarm payrolls following on Friday - reflecting the April 2 reciprocal tariffs announcements and the subsequent back-and-forth by President Trump.

Additionally, with the 10-year US yield dropping to a 3-week low, the Q2 quarterly refunding plan will be announced at 12:30 GMT. While small changes to the auction volumes cannot be excluded, the discussion about the debt ceiling could return in the spotlight.

A plethora of Trump’s comments is expected

In the absence of Fed speakers, Trump is expected to comment on the various US data prints, as he has a series of appearances scheduled to celebrate his 100 days in charge. Trump is expected to take credit for a positive set of data today, and most likely blame the Fed and Chair Powell if the data disappoints.

Trump’s criticism of the Fed could prove even tougher if today’s eurozone data widely opens the door to another ECB rate cut. The preliminary German CPI print for April is expected to slow further to just above 2%, following the weak GDP growth rate recorded in the first quarter of 2025.

The Fed prepares for next week’s meeting as oil prices drop

Regardless of any outside criticism, Fed members are focused on incoming data. The Fed doves are craving a dovish tilt at next week’s meeting, but there is still a heightened risk of a US recession ahead. In this context, WTI oil has quickly dropped below the $60 threshold again, potentially revealing renewed market concerns about the growth outlook, following the mixed PMI survey prints in China earlier today.

Meanwhile, the US administration is trying hard to create a “feel-good” factor about the ongoing trade negotiations. Following the relaxation of some of the 25% tariffs on autos and auto parts, Commerce Secretary Lutnick, stated that one trade agreement is already finished, while Treasury Secretary Bessent commented that 18 key trade deals are ready to be signed by Trump.

Both gold and bitcoin are in waiting mode

Gold continues to hover around the $3,300 level, with the $3,260 barrier acting as a floor. Interestingly, China will be on holiday until May 5, potentially removing one the biggest tailwinds of gold for a few sessions. Similarly, bitcoin is maintaining its recent significant gains. It is trading a tad below the $95k level and awaiting fresh bullish catalysts, particularly another upleg in US equities.

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