Global markets started the day on a cautiously optimistic note, with stocks grinding higher as positive sentiment spread across trading desks. Reports suggesting that the Trump administration is considering gradual month-by-month tariff hikes of 2-5% helped buoy investor confidence, fostering hopes for a less aggressive approach to trade tensions.

Currency Markets: Antipodeans Lead, DXY Firm, JPY Weakens

In currency trading, the US Dollar Index (DXY) ticked higher, reflecting a slight uptick in the greenback’s strength. Antipodean currencies, such as the Australian and New Zealand dollars, outperformed, riding on improved risk sentiment. Meanwhile, the Japanese Yen gave back its Monday gains as investors shifted away from safe-haven assets.

Fixed Income: Yields Off Best Levels Ahead of US PPI

In the bond market, fixed-income securities pulled back from their best levels as traders positioned themselves ahead of the release of US Producer Price Index (PPI) data. The PPI report is expected to provide further insight into inflationary pressures, which remain a focal point for monetary policy discussions.

Commodities: Crude Under Pressure, Precious Metals Gain

Commodities saw mixed performances:

• Crude Oil: Prices faced increasing pressure amid reports of a potential ceasefire in Gaza, which could ease supply concerns tied to geopolitical tensions.
• Base Metals: Trading was mixed, with no clear direction across the complex.
• Precious Metals: Gold and silver managed to eke out mild gains, benefiting from a modest safe-haven bid despite the broader risk-on sentiment.

Key Events Ahead: US PPI, EIA STEO, and Fed Speakers

The remainder of the trading day is packed with key events likely to influence market direction:

1. US Producer Price Index (PPI): A critical gauge of inflation, the PPI data will be closely scrutinized for any signs of persistent price pressures that could sway Federal Reserve policy.
2. EIA Short-Term Energy Outlook (STEO): The report will offer insights into the energy market, including supply and demand forecasts.
3. Federal Reserve Minutes: The minutes from the Fed’s Discount Rate meeting could shed light on policymakers’ latest discussions.
4. Fed Speakers: Remarks from Fed officials, including Schmid and Williams, are expected to provide further clues about the central bank’s policy trajectory.

As the day unfolds, markets are likely to remain sensitive to economic data releases and geopolitical developments. Investors will keep a close eye on the US PPI figures for signs of inflationary trends and on any further news regarding the proposed tariff strategy. Additionally, speeches from Federal Reserve officials could add another layer of volatility as traders seek to decipher the future path of interest rates.