In the currency market, the dollar was little-changed and continues to consolidate after recent falls. The Japanese yen rallied, benefiting from ‘risk-off’ flows as investors seek safe-haven assets. The euro was weaker across the board while sterling initially rallied following UK retail sales data, which came in way above expectations for the second month in a row.

Precious metals continue to react to heightened uncertainty. Gold pushed to fresh record highs, fuelled by ongoing trade tensions and investor demand for safe-haven assets. Silver, meanwhile, was only a touch higher on the day but holding at five-month highs.

Oil prices pulled back from the $70 per barrel level after a multi-day grind higher as traders reassessed demand prospects in light of global economic concerns. Natural gas remains under pressure, slipping slightly, though it appears to have found a bottom around the 380 level.

Crypto markets suffered sharp losses, with Ether leading the decline, sinking 5% and dropping back below the key $2,000 level. Risk sentiment continues to deteriorate. Bitcoin, which had been eyeing the $90,000 level, struggled to find traction amid the broader market selloff.

The VIX rose by 2%, inching toward the 20 mark. Market participants are bracing for a further uptick in volatility, with today’s inflation data set to provide a crucial read on the Fed’s policy trajectory.

• PCE price index (Today): The Fed’s most closely watched inflation indicator. A hotter-than-expected reading could revive rate hike fears, while a softer print may reinforce expectations for policy easing later in the year.
• Next week’s key events: ISM reports, the Reserve Bank of Australia’s interest rate decision, and Friday’s US jobs report, all of which will shape market sentiment.
• Fed officials on deck: More commentary from central bank officials could provide additional clues on future monetary policy.
• Bank of America’s Nvidia call: Analysts at BoA see Nvidia’s recent dip as a buying opportunity, signalling confidence in the long-term outlook despite recent selling pressure in tech.
• Xi calls for stability: Chinese Premier Xi Jinping has emphasised the need for stability in US-China relations, even as trade tensions escalate.
• Europe’s clocks move forward this weekend: A reminder that European markets will shift trading hours due to daylight saving time adjustments.

Markets remain under pressure, with tariffs disrupting the uptick in bullish momentum from last week. The focus now shifts to today’s PCE inflation print, which could dictate the market’s next move.

For now, the uncertainty surrounding trade policy continues to weigh on risk assets, while gold’s strong rally underscores investors’ flight to safety. With key economic data and central bank commentary on tap, the coming sessions will be critical in shaping near-term market direction.