As global markets wind down ahead of the May 1 Labour Day holiday, a renewed wave of buying interest has propelled the US Dollar higher, extending gains notched earlier in the week. The greenback’s strength reflects a complex intersection of easing geopolitical friction, particularly between the US and China, and investor recalibration following a series of softer-than-anticipated economic data points out of the United States.

Dollar Extends Gains Amid Mixed Signals

The US Dollar Index (DXY) edged higher, pushing into the 99.60–99.70 zone, its highest in two sessions. Market participants appear to be reconciling the latest economic underperformance with a relative haven bid, underpinned by subdued risk sentiment and expectations of subdued monetary recalibration. Yields across the Treasury curve offered a mixed signal, reflecting uncertainty over the trajectory of growth and policy.

On Thursday, attention shifts to a raft of key macro data including weekly Initial Jobless Claims, Challenger Job Cuts, and the final prints of the S&P Global Manufacturing PMI and ISM Manufacturing Index. Construction Spending will round out the session, offering another lens on underlying economic resilience—or lack thereof.

Euro and Sterling Yield to Dollar Pressure

The Euro remained under pressure, with EUR/USD extending its recent descent and flirting with the low-1.1300s. The single currency remains vulnerable to dollar dynamics, and Thursday’s calendar may provide limited relief. Focus will be on the final HCOB Manufacturing PMIs for Germany and the wider eurozone, alongside preliminary inflation figures and unemployment data. These releases could further crystallize the disparity in transatlantic economic momentum.

Similarly, the British Pound retreated, with GBP/USD slipping to a two-day trough near the 1.3300 level. The pullback reflects both a broader retreat in risk appetite and expectations for a more cautious tone from the Bank of England. Investors will be eyeing forthcoming data on mortgage approvals and lending, alongside final manufacturing PMI figures and key monetary indicators including M4 money supply and consumer credit.

Yen Underperforms as USD/JPY Clears Resistance

The Japanese Yen remained on the defensive, with USD/JPY breaking above the 143.00 level. The currency’s softness continues to reflect a widening policy divergence narrative, with the Bank of Japan expected to maintain its current interest rate stance. Final manufacturing PMI data and consumer confidence numbers may offer incremental clarity, but for now, yield differentials and risk sentiment continue to drive the pair.

Aussie Rangebound as China Lens Persists

AUD/USD traded in a tight consolidative band around 0.6400, as traders remain closely attuned to any shifts in the US-China trade dynamic. A relatively quiet domestic backdrop awaits, with focus turning to Australian balance of trade figures, commodity prices, and Q1 import/export price data. Final PMI readings may provide further nuance, though volatility is expected to stay contained barring any surprise in external developments.

Commodities: Crude Retreats, Precious Metals Slip

WTI crude oil prices declined sharply toward the $58.00 mark, weighed down by expectations of a potential supply boost. This move came despite a larger-than-expected drop in US crude inventories, underscoring how forward-looking market sentiment remains firmly anchored in production dynamics and macro concerns.

Gold prices revisited the $3,270 level, extending their pullback amid a firmer dollar and a fading bid for safe havens as trade tensions recede. Silver mirrored this trajectory, slipping further to multi-day lows near $32.00 per ounce, reinforcing a broader trend of consolidation across the precious metals complex.

As the global trading calendar pauses for Labour Day, the market remains in a state of tactical reflection. The prevailing theme continues to be one of recalibration—of data expectations, policy paths, and global macro alignment. While the US Dollar enjoys a period of relative strength, this positioning is anything but settled, with each fresh economic print carrying the potential to reshape the narrative.