Oil prices slipped on Friday as markets positioned ahead of a closely watched U.S. inflation release. With investors seeking clarity on the Federal Reserve’s policy direction, energy markets saw modest profit taking following recent volatility across commodities. The U.S. dollar inched higher, adding mild pressure to oil benchmarks, while gold also retreated as risk sentiment steadied across Asia and Europe.
Yen Under Pressure as Japan Signals Additional Debt Issuance
The Japanese yen weakened for a sixth straight session after Finance Minister statements indicated Japan may need to issue additional government debt to support Prime Minister Sanae Takaichi’s upcoming economic stimulus program. The signal reinforced expectations of continued fiscal expansion and policy accommodation in Japan, intensifying yen selling as traders leaned back into dollar strength. Market participants remain focused on how Tokyo balances stimulus with currency stability in the coming weeks.
Xi–Trump Meeting Confirmed, Easing Geopolitical Tensions
Sentiment improved meaningfully after the White House confirmed that President Donald Trump and Chinese President Xi Jinping will meet on the sidelines of the upcoming Asia-Pacific Economic Cooperation summit. The encounter will mark the two leaders’ first in person meeting since Trump’s return to office and comes amid renewed tariff and technology tensions. For markets, the meeting represents progress over stalemate not necessarily a breakthrough, but a signal that dialogue remains active. This was enough to drive a relief rally across equities and emerging market currencies.
Canadian Dollar Softens as Trade Tensions Resurface
The Canadian dollar edged lower after President Trump signaled a halt to trade negotiations with Canada, citing political messaging out of Ontario. While the move does not represent a formal shift in economic ties, it adds a fresh layer of uncertainty to North American trade relations and placed modest pressure on the loonie in thin overnight trading.
Markets Now Turn to U.S. Inflation as Treasury Yields Stabilize
With geopolitical sentiment stabilizing, investor attention now centers on the delayed U.S. inflation print, set for release later today. Cross asset price action suggests markets expect the report to show cooling price pressures allowing the recent equity and credit gains to hold. U.S. Treasury yields, which paused a multi-session rally overnight, remain steady, with the 10-year benchmark hovering near recent levels.
Market Outlook: Data Takes Priority Over Noise
For traders, the message is clear, the next market catalyst will come from economic data rather than geopolitical headlines. A benign U.S. inflation reading could reinforce expectations of gradual Federal Reserve easing, underpinning risk assets. A hotter than expected figure, however, could quickly reawaken volatility across currencies, commodities, and bonds.
This is a data dependent end to the week and traders should stay alert.
Disclaimer: This report is for informational purposes only. It does not constitute investment advice or represent the official views of any central bank or regulatory body.