Tariffs Ignite Safe-Haven Rally

Moneta Markets Daily Market Update: May 6, 2025

Global financial markets on May 6, 2025, are stabilizing as investors await the Federal Reserve’s two-day FOMC meeting, with major currency pairs trading in tight ranges. Gold and silver rally on safe-haven demand driven by Trump’s new tariff threats and Middle East tensions, while the US Dollar holds steady despite recent weakness. AUD/USD consolidates after election-driven gains, and USD/JPY remains under pressure from a stronger Yen. Key data releases, including US and Canadian trade balances and Eurozone PMI, are in focus, with the FOMC outcome and Powell’s comments expected to drive volatility.

Gold Surges Toward $3,400

Current Level: Gold (XAU/USD) trades near $3,380, nearing a two-week high.

Market Dynamics: Trump’s 100% tariff on foreign films and planned pharmaceutical tariffs boost safe-haven demand. Middle East escalations (Israel-Houthi strikes) and Russia-Ukraine drone attacks add support. A steady USD (DXY above 99.50) limits gains, but strong US ISM Services PMI (51.6) and NFP (177K jobs) ease recession fears. Markets await FOMC signals on rate-cut timing, with Powell’s comments critical.

Technical Outlook: Resistance at $3,385 (61.8% Fibonacci); support at $3,350. Positive oscillators favor bulls, but a break above $3,400 could target $3,425.

Silver Breaks Above $33.00

Current Level: Silver (XAG/USD) trades around $33.10, up for the second day.

Key Drivers: Trump’s tariff threats (100% on films, pharmaceuticals pending) spur safe-haven flows, though USD strength caps gains. Industrial demand concerns linger amid global slowdown fears. China’s Caixin Services PMI at 50.7 signals slower growth, pressuring silver’s industrial outlook. FOMC’s unchanged rate stance may influence USD and silver prices.

Technical Outlook: Resistance at $33.50; support at $32.80. RSI above 50 suggests bullish momentum, with FOMC as a key catalyst.

AUD/USD Consolidates Above 0.6450Current Level: AUD/USD trades near 0.6450, stabilizing after hitting 0.6500.

Market Dynamics: Albanese’s election win and Judo Bank Services PMI at 51.0 support AUD, but weak Retail Sales (0.3% MoM) and China’s PMI slowdown (50.7) limit upside. USD holds firm post-NFP and ISM data, with trade deal hopes (Bessent’s comments on deals) adding optimism. RBA rate-cut bets for May persist, capping AUD gains.

Technical Outlook: Resistance at 0.6515; support at 0.6408 (nine-day EMA). RSI above 50 maintains bullish bias, with FOMC and US trade balance data key.

USD/JPY Under Pressure Below 143.50

Current Level: USD/JPY trades near 143.30, down 0.9% Monday.

Influencing Factors: Safe-haven JPY gains from Middle East and Russia-Ukraine tensions, despite BoJ’s dovish stance (0.5% rate). USD struggles post-NFP, with FOMC expected to hold rates unchanged. Trump’s tariffs (100% on films) and trade talk optimism (China reviewing US proposal) create mixed sentiment. Japan’s inflation supports BoJ hike bets for 2025.

Technical View: Support at 143.30; resistance at 144.25. Negative oscillators signal bearish bias, with a break below 142.65 targeting 141.00.

EUR/USD Rangebound Near 1.1300

Current Level: EUR/USD trades near 1.1320, below 1.1350.

Market Dynamics: USD stability post-ISM Services PMI and NFP limits EUR losses, but Trump’s tariffs and trade uncertainty cap USD gains. Eurozone PMI data (expected stable) and ECB’s June rate-cut bets (25 bps) weigh on EUR. UK’s insulation from US tariffs supports GBP, pressuring EUR/GBP. FOMC and Powell’s comments are pivotal.

Technical Outlook: Resistance at 1.1380; support at 1.1265. Mixed oscillators suggest caution, with 200-period SMA (1.1125) as a key level.

GBP/USD Edges Above 1.3320Current Level: GBP/USD trades near 1.3325, extending gains.

Key Drivers: USD softness and UK’s relative tariff insulation (US $12 billion surplus) lift GBP. BoE’s expected 25 bps rate cut to 4.25% on Thursday caps upside. Strong UK services PMI (53.1) supports sentiment, but Trump’s trade policies add uncertainty. FOMC outcome will influence USD dynamics.

Technical Outlook: Resistance at 1.3445; support at 1.3234. RSI near 55.60 signals bullish momentum, with BoE decision critical.

Economic Data and FOMC Focus

Today’s Data: Eurozone Producer Price Index (March), US and Canadian trade balances. US trade deficit expected to widen slightly, while Canada’s surplus may narrow due to tariff concerns. Eurozone PMI expected to show steady services growth.

FOMC Meeting: Rates likely unchanged, with Powell’s comments on tariffs and rate-cut timing (July favored) crucial. Strong NFP (177K) and ISM Services PMI (51.6) reduce June cut odds, but tariff-driven inflation risks loom.

US-Canada Trade: Trump’s 25% tariffs on Canada (effective March) pressure CAD, with trade balance data critical amid exemption talks.

US-China Trade and Geopolitical Risks

Trade Status: Trump’s 100% film tariff and pharmaceutical tariff plans escalate tensions, but Bessent and Lutnick signal progress in trade deals, possibly with top-10 economies. China reviews US talk proposals but demands tariff corrections.

Geopolitical Tensions: Middle East airstrikes (Israel-Yemen) and Russia-Ukraine drone attacks fuel safe-haven demand, boosting gold, silver, and JPY. Putin’s ceasefire rejection adds uncertainty.

Outlook

On May 6, 2025, markets are cautious as major pairs stabilize ahead of the FOMC meeting, with gold and silver rallying on tariff-driven safe-haven demand. AUD/USD holds gains, while USD/JPY weakens under JPY strength. EUR/USD and GBP/USD face resistance, with BoE and ECB decisions looming. Today’s PMI and trade balance data, alongside Powell’s FOMC comments, will shape market direction, with trade and geopolitical risks keeping investors on edge.

Stay tuned for further updates.