Nasdaq erases April losses, Dow and SPX extend winning streak

In the FX markets, the US dollar came under selling pressure as the week drew to a close. Investors appeared to be booking profits ahead of today’s US Non-Farm Payroll release. 

The Dollar Index has bounced off the multi-year lows hit ten days ago when it briefly broke below 98.00. Back then, it looked very oversold. But the daily MACD has picked up since then, and yesterday, it touched 100.00 before a modest pullback that has deepened this morning. 

The Japanese yen is in a similar situation. Yesterday, it dropped sharply as the Bank of Japan indicated that it was in no hurry to raise interest rates. But investors appear to be booking profits and reducing their exposure ahead of this afternoon’s big US data release.

Gold was modestly higher in early trade this morning.  Yesterday, it tested $3,200 as support, and so far, it has held. This should offer some encouragement for the bulls, particularly as the daily MACD has fallen sharply and is now less overbought than it was just a week ago. 

That’s not to sound the ‘all clear’ for the bulls. Gold still needs to blow off some of the froth from the last leg of its strong rally. But it’s possible it could achieve this, and reset the MACD to more neutral levels, through an extended period of consolidation. If it can manage this without another significant leg down, long-term gold bulls should happily take that as a victory. 

Silver broke below $32 per ounce yesterday afternoon. But it subsequently bounced sharply, and it added to those gains overnight.

Crude oil also bounced sharply yesterday afternoon. It had come under relentless selling pressure throughout this week, a move that took front-month WTI back down to lows last seen in early April. But the sell-off reversed yesterday afternoon, led by a bout of short-covering. This added $3 to WTI, taking it back into positive territory on the day. However, prices have fallen steadily overnight as traders fine-tune their exposure ahead of Monday’s OPEC+ meeting.

Natural Gas prices were weaker overnight. Once again, traders took advantage of yesterday’s rally to lighten long positions going into the payroll data and the weekend. Gas has managed to climb off recent lows. 

This time last week, the front-month contract came within a few cents of breaking below $3.000. But it was very oversold, and prices have bounced since then. The daily MACD suggests there could be more upside to come. But the bounce may reflect short-term positioning rather than a meaningful shift in sentiment, with traders awaiting further direction from next week’s OPEC+ meeting and broader risk signals.

Across cryptocurrencies, activity was relatively subdued following yesterday’s rally. Bitcoin broke above $97,000 overnight, before pulling back from its best levels. While today’s move lacked urgency, it underscores Bitcoin’s quiet resilience, especially given the backdrop of shifting equity sentiment and lingering uncertainty around tariffs. 

The $100,000 level remains the key near-term psychological target. The current consolidation suggests investors are cautiously positioning themselves for a potential breakout should broader risk appetite continue to improve.

The VIX is yet another market which is currently consolidating and preparing for its next move. It has pretty much halved from the highs hit in early April, thanks to President Trump’s tariff brouhaha. Trading in the low 20s, the front-month contract is holding around levels which acted as resistance back in March. This is looking like support now. 

Investors are less fearful than they were a few weeks ago, but there’s still a raised level of caution being expressed. President Trump is living up to his reputation as a maverick, capable of saying anything, irrespective of how it may be received by the markets. Now investors must prepare for this afternoon’s Non-Farm Payroll release, and then position themselves for the weekend, and any tariff updates. That's a lot to factor in.

A packed data calendar awaits, starting with Eurozone CPI in the morning and capped by the US jobs report at 13:30 BST. Markets are looking for a headline print of around 140,000. However, the light ADP figure earlier this week has some suggesting a sub-100,000 print is possible—a number that would likely be interpreted as favouring further easing of monetary policy from the Fed.

On the geopolitical front, Japan formally rejected a US proposal on tariffs, according to Japanese news reports. US Vice President JD Vance commented that the Russia–Ukraine war is unlikely to end soon. Elsewhere, Australia holds elections this weekend, and in the UK, Nigel Farage won a by-election, as the Reform Party’s popularity surges.

Note: UK markets will be closed on Monday for a bank holiday.

While earnings from Apple and Amazon initially rattled stock index futures, optimism around renewed US-China trade talks led to a rebound in positive sentiment.

Attention now shifts to the US jobs report, which could determine whether this rally continues uninterrupted or takes a breather. As always, tariff headlines remain the wild card, capable of swinging sentiment in either direction.