The European Central Bank (ECB) announced a 25 basis points cut at its latest meeting, marking a potential conclusion to its current rate-cutting cycle after six successive reductions. This decision comes as inflation moves closer to the ECB's 2% policy target, signaling a shift in the economic landscape. Meanwhile, the GBP/USD pair regained traction, trading above 1.2900 during the European session, bolstered by retreating US Treasury bond yields.
European defense stocks have consolidated their gains near all-time high levels following a significant agreement among European nations to invest EUR 800 billion into strengthening defense and security. This move underscores Europe's determination to bolster its security infrastructure amidst ongoing geopolitical tensions. The EUR/USD also gathered bullish momentum, reaching its highest level since early November, trading above 1.0850 on Friday.
In the United States, all eyes are on the upcoming jobs data expected later today, which could provide further insights into the country's economic outlook. The broader financial markets experienced varying impacts as Broadcom shares surged nearly 13% in after-hours trading, following a report of better-than-expected quarterly results and a robust forecast. Additionally, former President Donald Trump announced a pause on tariffs imposed on Canadian and Mexican imports, potentially easing trade tensions.
Europe's economic narrative has long been associated with slow growth, fiscal austerity, and high reliance on monetary policy. However, Germany's recent fiscal expansion signals a possible shift in this paradigm, with potential ripple effects across the continent. The EUR/USD's bullish trend highlights a growing confidence in the Eurozone economy, contrasting with the selloff in the US that has largely left European market appetite unaffected.
Bets on further interest rate cuts by the Federal Reserve have also played a role in limiting losses for XAU/USD, as market participants continue to navigate a complex global economic environment. The movements in currency pairs and market trends underscore the intricate interplay of monetary policies and geopolitical developments.