Markets are treading cautiously this morning as a mix of political pressure, economic data, and central bank chatter keeps investors on edge.

Trump Turns Up the Heat on Europe

In a significant geopolitical development, former U.S. President Donald Trump is reportedly pushing the European Union to slash tariffs or risk facing additional duties. According to the Financial Times, U.S. negotiators will press Brussels for unilateral concessions, signaling a renewed emphasis on protectionist trade tactics. Markets will be watching closely for the EU’s response, as the threat of trade friction could rattle global sentiment.

Equity Futures Split

European and U.S. equity futures are showing a mixed picture, hovering near the flatline. This hesitant tone reflects a market grappling with multiple crosscurrents — from inflation surprises to geopolitical risks and central bank dynamics.

Currency Market Moves: Dollar Softens Again

The U.S. dollar has once again lost its footing after a brief rebound attempt on Thursday. The Japanese yen is the standout performer, buoyed by stronger-than-expected core inflation data that has reinforced expectations of tighter monetary policy from the Bank of Japan. Meanwhile, the British pound is holding steady following retail sales figures that came in firmer than anticipated.

Bond Markets Bounce

Bonds are seeing renewed interest, with U.S. Treasuries attempting to recover from recent declines. In Europe, German Bunds initially dipped on weaker GDP data but quickly regained ground, suggesting investor demand remains strong in the face of economic uncertainty.

Commodities Check: Oil Lags, Metals Climb

Crude oil remains under pressure, lacking any strong directional driver ahead of scheduled U.S.-Iran nuclear talks set for 12:00 BST / 07:00 EDT. In contrast, metals are on the rise, benefiting from the continued softness in the U.S. dollar, which typically boosts dollar-denominated commodities.

Eyes Ahead: Data and Central Bank Commentary

Looking ahead, Canadian Retail Sales data is on deck and could offer insights into North American consumer trends. Meanwhile, markets will also tune into comments from a slate of central bank speakers, including the ECB’s Isabel Schnabel, the BoE’s Huw Pill, and Fed officials Jim Musalem and Lisa Cook. Any hints on future rate paths or inflation outlooks could provide direction for risk assets heading into the weekend.