Stock markets have resumed the upward trend, with S&P 500 testing resistance, which could be broken today is sentiment remains positive.Skerdian
Quick overview
- Stock markets are on an upward trend, with the S&P 500 testing resistance levels amid positive sentiment.
- The Bank of England cut interest rates by 25 basis points, aligning with expectations but disappointing some who anticipated a larger cut.
- The US and UK announced a new trade agreement expected to create $5 billion in opportunities for US exporters, while maintaining a 10% tariff on goods.
- Bitcoin surged over 6% to surpass $103,850, marking a significant recovery, while Ethereum rebounded to over $2,200 after a prolonged downtrend.
Stock markets have resumed the upward trend, with S&P 500 testing resistance, which could be broken today is sentiment remains positive.
Bank of England Rate Cut and Market Reactions
On UK Day, the Bank of England decided to reduce interest rates by 25 basis points, which was in line with expectations. However, some market participants had hoped for a 50 basis point cut, while others favored maintaining the current rate. BOE Chair Andrew Bailey found himself in the spotlight as he faced a barrage of questions during a Q&A session, putting him under considerable pressure.
New Trade Deal Between the US and the UK
In a significant development, the United States and the United Kingdom announced the framework for a new trade agreement. This agreement keeps a 10% tariff on all goods and is expected to create $5 billion in new opportunities for US exporters, according to US Commerce Secretary Lutnick. Additionally, the UK will purchase $10 billion worth of Boeing aircraft, while the US agreed to allow Rolls-Royce engines and parts to be imported tariff-free. Rolls-Royce and Bentley cars are also exempt from tariffs. UK officials noted that the final elements of the deal are expected to be concluded in the coming weeks. The United States will also gain access to new markets for machinery and chemicals.
Josh Brown, speaking cynically on CNBC, remarked, “The United States has reached an agreement with its strongest ally for the last 200+ years.” His comment summed up the mood surrounding the trade deal.
US Tariffs and Stock Market Performance
The NY Post reported that the US might reduce tariffs on Chinese imports to 50% by next week, and President Trump expressed confidence about the upcoming discussions with China. According to Trump, 10% tariffs were the best deal a nation could get. After declines in the first two trading days of the week, stocks bounced back over the past two sessions. The Dow rose by 0.62%, maintaining a slight weekly gain of 0.12%, while the S&P 500 increased by 0.58%, although it was still down 0.40% for the week. The Nasdaq posted a 1.07% gain, but remained down 0.28% for the week. The outcome of the final day of trading will determine whether the week ends on a positive note.
US Dollar Strength
The US dollar strengthened against major currencies, with the EUR/USD falling to lows of 1.12, GBP/USD dropping to 1.3250, and USD/JPY rising by 2.5 cents to surpass 146. In Canada, the unemployment rate is expected to remain at 6.7%, but employment is projected to increase by 24.5K, recovering from a previous decline of 32.6K.
Today’s Market Outlook, Key Earnings to Watch
Today we have a plethora of central bankers speaking, starting with the UK Bank of England Andrew Bailey first in the European session, followed by FOMC Member Barkin, FOMC Member Williams, FOMC Member Goolsbee, FOMC Member Waller, FOMC Member Cook and FOMC Member Musalem who can induce some volatility in forex.
S&P 500 Chart Daily – Can Buyers Push Above the 200 SMA Today?
In Canada, the labor market has shown signs of strain since US tariffs were imposed in March, with the unemployment rate rising to 6.7% and employment falling. The labor force participation rate has also decreased for two consecutive months. Although the job market hasn’t collapsed entirely, unemployment is still below the 6.9% peak from last year. However, ongoing declines in job openings suggest further challenges ahead. RBC analysts predict the unemployment rate will continue to rise through the second half of 2025.
Last week, markets were slower than what we’ve seen in recent months, with gold retreating as a result, the EUR/USD falling to 1.13, and stock markets continuing upward. The moves weren’t too big, but we opened 37 trading signals in total, finishing the week with 25 winning signals and 12 losing ones.
Gold Pullback Stalls at the 20 Dily SMA
Gold experienced a sharp correction after reaching an all-time high of $3,500 per ounce in April. In the past two days alone, spot gold (XAU/USD) has dropped nearly $140, bringing the price to around $3,300 per ounce, a 1.9% decline. This pullback coincided with a renewed sense of optimism in the markets, fueled by the announcement of the new US-UK trade deal. While this dip follows a sharp rally, some analysts suggest that the pullback is more driven by trade optimism than any fundamental change. The 20-day simple moving average (SMA) has served as strong support during gold’s rise. If the price stabilizes, potentially forming bullish reversal patterns, it could present an opportunity to enter long positions again.
USD/JPY Buyers Return
The USD/JPY pair recovered from the critical 140.00 level, supported by its 100-month moving average. However, a 2.5-cent surge yesterday pushed the pair to 146. Despite this recovery, the Japanese yen remains vulnerable to global risk sentiment and the momentum of the US dollar.
USD/JPY – Weekly Chart
Cryptocurrency Update
Bitcoin Reclaims the $100 Level
Bitcoin resumed the upside momentum and surged more than 6% yesterday, surpassing $103,850 and marking its first time above $100,000 since February. This movement highlights Bitcoin’s continued strength, as it held firm while other assets struggled.
BTC/USD – Weekly chart
Ethereum’s Recovery and Market Trends
Ethereum had been in a prolonged downtrend for much of the year, falling from a high of $3,634 in January to a low of $1,475 in early April. This decline mirrored a broader flight from risk assets amid new US trade tariffs and global uncertainties. However, after the Petra upgrade, Ethereum experienced a significant rally, rising nearly 20% to surpass $2,000. This upward movement continued, pushing Ethereum beyond $2,200, reversing months of downward pressure.
ETH/USD – Weekly Chart
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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