Soft US Economic Data Boosted Gold
The gold price ( XAU/USD ) rose by 0.56% on Wednesday following the weaker-than-expected ADP US Employment report.
Recent data revealed a surprising contraction in the US services sector—the first decline in nearly a year. Meanwhile, ADP figures showed the slowest private sector job growth since March 2023. These signs of economic weakness have strengthened expectations that the Federal Reserve (Fed) will cut rates at least twice in 2025, a scenario that supports non-yielding assets such as gold. Despite growing market pressure and demands from US President Donald Trump to lower interest rates, Fed officials have so far maintained a cautious stance. They emphasised the need for more clarity amid persistent economic and geopolitical uncertainties.
Trade tensions continue to loom large over the outlook. Markets remain cautious following President Trump’s decision to double tariffs on steel and aluminium imports. Trump’s increasingly combative rhetoric—especially toward Chinese President Xi Jinping—has heightened fears of a renewed trade war. These developments, combined with weak US economic data, have shifted market focus to Friday’s US nonfarm payrolls report, now seen as a potential turning point for the Fed’s policy stance.
XAU/USD slightly rose during Asian and early European trading sessions. Today, US Jobless Claims at 12:30 p.m. UTC could shed light on the state of the US labour market, potentially altering US monetary policy expectations. Traders should also monitor trade tariff news and negotiation developments. Key levels to watch for XAU/USD are support at $3,340 and resistance at $3,395.
Disappointing US Economic Indicators Supported Euro
The euro ( EUR/USD ) gained 0.42% against the US dollar (USD) on Wednesday following weak US economic reports.
The ADP Employment report surprised to the downside, showing just 37,000 private-sector jobs added in May—the lowest in over two years. The report raised concerns about slowing momentum in the US labour market. At the same time, the ISM Services Purchasing Managers’ Index data revealed a contraction in May for the first time in nearly a year. The contraction was driven by a sharp pullback in new business and rising input costs, which US President Donald Trump’s recent tariff hikes may have exacerbated.
These developments have intensified speculation about potential monetary policy easing, aligning with Trump’s ongoing calls for rate cuts. However, Federal Reserve (Fed) officials have so far maintained a cautious tone, citing ongoing trade and inflation risks. Markets are now focused on weekly Jobless Claims and nonfarm payrolls reports, which could be pivotal in shaping the US monetary policy.
EUR/USD remained relatively flat during Asian and early European trading sessions. Today, the US Jobless Claims at 12:30 p.m. UTC may provide fresh insight into labour market conditions, possibly altering Fed monetary policy expectations. Traders should also monitor any tariff-related news and developments around trade negotiations. Key EUR/USD levels: support at 1.13600 and resistance at 1.14400.
Japanese Yen Rises as Investors Flee From US Dollar
The Japanese yen ( USD/JPY ) held steady at around 142.900 on Wednesday, supported by a weaker US dollar (USD) following disappointing US economic data.
Signs of a sharp slowdown in private-sector hiring and an unexpected contraction in the US services sector have heightened fears that trade policy uncertainty is starting to weigh on broader economic activity. Weak US data fuelled risk-off sentiment, boosting demand for the yen—a traditional safe-haven asset during periods of global uncertainty.
Domestically, Japan’s economic outlook remains fragile. April marked the fourth consecutive month of real wage declines as inflation outpaced income growth. This persistent erosion in household purchasing power raises concerns about domestic demand and complicates the Bank of Japan’s (BoJ) path to policy normalisation. Still, BoJ Governor Kazuo Ueda reiterated that the central bank is ready to raise interest rates if inflation and economic projections are met, indicating a cautious but deliberate shift toward tightening amid a challenging global backdrop.
USD/JPY edged higher during Asian and early European trading sessions. In addition to tariff-related news, traders should focus on the US Jobless Claims report at 12:30 p.m. UTC. USD/JPY traders should watch the critically important levels: resistance at 144.500 and support at 142.500.