Europe opens flat as markets pause near highs

US stock indices ended Thursday largely unchanged after a volatile session. President Trump’s tax bill passed its first hurdle, squeaking through a vote in the House of Representatives. It now goes up to the Senate. However, there was little reaction across equity markets as concerns remain over the bill’s long-term implications for the US debt burden.

US stock index futures opened lower on Friday, but they began to move into positive territory as the European session progressed.

Source: TN Trader

Asian Pacific stock indices ended the week on a mostly positive note. Hong Kong’s Hang Seng and the Japanese Nikkei ended up 0.2% and 0.5% respectively. But the Shanghai Composite lost 0.9%, ending the week in negative territory.

Chinese investors took some risk off the table, as uncertainty surrounds the US debt situation, adding to the ongoing trade dispute with the US.

In the Forex market, the dollar headed lower overnight, giving back Thursday’s modest gains. The dollar index traded around 99.000, a level that provided a modicum of support. 

The Index has pulled back from a high of 101.50 hit around a fortnight ago. This represented a recovery off multi-year lows hit in late April when the dollar was looking oversold. The daily MACD on the Dollar Index is now back at neutral levels, and upside momentum has started to fade. 

Sterling has rallied steadily since the positive UK Retail Sales print, with the GBP/USD trading just a touch south of 1.3500.

Source: TN Trader

The euro followed suit, with the EUR/USD trading above 1.1300. The Japanese yen was also stronger, with the USD/JPY edging closer to 143.00. The broad narrative remains one of dollar softness, with global currencies taking advantage of the shift in sentiment.

Source: TN Trader

Gold was firmer overnight, supported by the weaker dollar. Gold has pushed back above $3,300, but it continues to face resistance around $3,350. 

Intra-day trade has been quite volatile, with wide swings being the norm in recent sessions. This is often the case when there’s indecision amongst investors and traders.

Source: TN Trader

Oil prices were steadier heading into the long holiday weekend, following a sharp pullback from Tuesday’s high. This came on fresh concerns over the increased likelihood of yet another bigger-than-expected increase in supply as OPEC+ continues to roll back production cuts. Front-month WTI appeared to have found some support around $60 per barrel, having traded above $64 on Tuesday.

Both Brent and WTI are on track for their first weekly decline since April. Brent is down roughly 2% for the week, with WTI off nearly 2.7%, as markets brace for the possibility that OPEC+ could approve a production hike of over 400,000 barrels per day at its meeting in early June. Downside pressure has been exacerbated by an unexpected build in US crude inventories.

The crypto space remains in the spotlight. Bitcoin climbed to a fresh all-time high overnight within a few dollars of $112,000. Cryptos got a lift this week as investors sought them out as an alternative haven from uncertainty around trade and US debt. 

This came as investors spurned both the US dollar and US Treasuries as safe havens. In addition, there has been progress on the US GENIUS Act, which is legislation aimed at stablecoin oversight. This has buoyed sentiment, building confidence in the regulatory outlook.

Bitcoin has gained traction as a hedge against fiat volatility, especially in the wake of the recent US sovereign credit downgrade. Even as US equities pull back, the digital asset’s price resilience signals a growing appetite among investors for alternative stores of value.

Ether extended its recent outperformance, leading the sector higher. The rally continues to draw in buyers, with risk appetite clearly favouring digital assets this week.

The VIX traded just under 21 on the June contract after surging earlier in the week. The move reflects lingering concerns around the US debt trajectory and rising yields.

While not extreme, the elevated volatility suggests markets are still uneasy as they process the implications of the tax plan and budget discussions.

No major earnings are on the docket today, though all eyes will turn to NVIDIA next Wednesday. Traders will also be watching for further Fed commentary and US housing data. Elsewhere, the US and China held their first official call since the tariff suspension. This was a sign of potential progress.

The passing of President Trump’s tax bill through the House of Representatives has not provided the sustained lift markets may have hoped for, as debt concerns temper enthusiasm. The dollar’s continued weakness has offered opportunities elsewhere, lifting gold and pushing FX pairs to key levels. With a long holiday weekend ahead in both the US and the UK, positioning may remain light, leaving room for potential volatility into month-end.