The dollar advanced Thursday, boosted by end-of-month hedging and rising demand for safe havens following cautious signals from central banks, including the Fed and ECB. U.S. data showed resilience, lifting Treasury yields from session lows, although market bets remain tilted toward Fed rate cuts later this year amid persistent trade uncertainties.

Sterling Weakens as BoE Maintains Cautious Tone

GBP/USD declined 0.32% after the Bank of England kept rates at 4.5%, with Governor Bailey warning against premature rate-cut expectations amid sluggish disinflation. Sterling failed to sustain gains above 1.30, now eyeing support near 1.2901, while a break above 1.3046 could open a path toward 1.34.

Euro Dips on Tariff and Growth Worries

EUR/USD dropped 0.48%, retreating toward key support at 1.08 amid concerns over escalating U.S.-EU trade tensions and doubts about Germany’s spending initiatives. ECB President Lagarde warned potential U.S. tariffs could significantly harm eurozone growth, dampening euro sentiment.

Yen Steadies as USD/JPY Holds Above 149

USD/JPY reversed early declines, supported by stabilizing U.S. yields and positive economic data, settling near 149. Traders await Friday’s Japanese CPI release, which could shape expectations for future Bank of Japan policy adjustments.

Aussie Falls on Trade and Risk Concerns

AUD/USD slid sharply (-0.88%) following disappointing Australian trade figures and diminished confidence in China’s economic rebound, exacerbated by global trade tensions. Risk-sensitive crosses like AUD/JPY (-0.79%) also faced pressure amid the cautious market mood.

Bonds and Commodities

Treasury yields declined slightly, with the 2s-10s curve steepening to +27.6bps. Oil prices gained 1.7% on OPEC+ production news, while gold and copper were stable, reflecting cautious positioning.

Investors remain cautious as geopolitical tensions and central bank policy uncertainties dominate sentiment.