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• Swiss federal council consults on impact of US tariffs, agrees on existing instruments
• No slump in overall economic development currently expected

So far, there’s not too much progress on this front with Switzerland yesterday saying that they are hoping for a result from talks with the US only in early July.

This article was written by Justin Low at www.forexlive.com.

The USD has been supported
across the board in the first half of the month as the positive news on the
trade front triggered a more hawkish repricing in interest rates expectations. Once
the market got back in line with the Fed’s baseline of two rate cuts in 2025,
the greenback lost that support and began to weaken again.

For further gains, the US
Dollar will need either strong economic data to make the market to price out the
rest of the rate cuts expected by year-end or weak data from its peers to make
the divergence with the Fed stronger.

Yesterday, we got a little taste of that as the very soft French inflation figures weighed on the euro. The ECB policymakers also continue to blame the stronger euro for the
downside risks for inflation. This might eventually force them to cut
more than expected while the Fed keeps rates higher for longer due to
upside inflation risks as seen already in the latest US Flash PMIs.

On the 4 hour chart, we can see that the price yesterday broke below the minor upward trendline and extended the fall as more sellers started to pile in. We have a strong support zone around the 1.1270 level where we can find also the confluence with another trendline. That’s where we can expect the buyers to step in with a defined risk below the support to position for a rally into new highs. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 1.10 handle next.

Starting from next week, we have lots of key events for the USD including the release of the ISM PMIs, the NFP and the CPI, which will culminate into the FOMC decision on June 18th.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

That’s a modest improvement as trade tensions have also eased since last month, with better developments for the global economy following a thaw in the US-China conflict especially.

This article was written by Justin Low at www.forexlive.com.

• Prior 4k
• Unemployment rate 6.3% vs 6.3% expected
• Prior 6.3%

German unemployment was seen a little higher than expected in May but the jobless rate remains unchanged compared to April at least. The labour office noted that “the market is not getting the tailwind it needs for a trend reversal”. Adding that they expect unemployment figures to rise further in the summer.

This article was written by Justin Low at www.forexlive.com.

• Prior -0.1%

The details are less encouraging with household consumption actually falling by 0.2% during the quarter. Overall, that led to domestic demand making a negative contribution of 0.1% in Q1, following a 0.2% positive contribution in Q4 last year. The overall GDP increase was led by inventory changes instead (+1.0%), offset by net foreign trade (-0.8%).

This article was written by Justin Low at www.forexlive.com.

• Prior -1.0%

That marks the sharpest monthly decline in import prices since the Covid pandemic period. That said, the drop is largely driven by a plunge in energy prices which fell by 11.2% on the month. If you strip that out, import prices were down 0.8% compared to March.

This article was written by Justin Low at www.forexlive.com.

As things stand, Japan is still wanting to push for the removal of all tariffs. In particular of course are the ones on autos, as seen with the image below. Akazawa will be leaving to Washington tomorrow and is scheduled to meet with Bessent on Friday for ministerial-level talks. So, we’ll see what comes of that. I wouldn’t hold my breath for any major breakthroughs though.

This article was written by Justin Low at www.forexlive.com.

Russia’s Medvedev on Trumps comment that Putin is playing with fire….

“I only know of one really bad thing- WWIII”

Let’s hope not, but two leaders are starting to shove each other. Trump with his words. Putin with his continuous bombing of Ukraine.

This article was written by Greg Michalowski at www.forexlive.com.

• RBNZ Gov. Hawkesby says decision to hold a rate vote was a healthy sign
• Recap: BoJ Ueda says Bank on alert to impact of super-long yield swings on borrowing costs
• BOJ likely to keep cutting bond purchases, says BofA
• NZD/USD bouncing after the expected RBNZ 25bp cash rate cut
• China MofCom offers strong opportunities to German SMEs to invest and grow
• RBNZ cuts cash rate by 25bp vs. 25bp expected
• Wall Street Journal: Putin Has Retooled Russia’s Economy to Focus Only on War
• Australian monthly CPI (April 2025) 2.4% y/y (vs. 2.3% expected)
• Australian data – Q1 2025 Construction Work Done +0.0% q/q (vs. expected +0.4%)
• Japan is reportedly offering to buy up to $6.94 billion worth of US semiconductors
• PBOC sets USD/ CNY mid-point today at 7.1894 (vs. estimate at 7.1996)
• KRW traders note – South Korea FX market to close June 3 for presidential election
• USD/JPY has ticked a little lower – we had Kato and Ueda speaking
• Japan finance minister Kato – Will closely monitor bond market situations
• Bank of Japan Governor Ueda says tariff negotiations means outlook remains uncertain
• Fed’s Williams says wants to avoid inflation becoming highly persistent
• Barclays: US consumer spending to continue to decelerate, not improve much into year end
• Australian monthly CPI due today – what to expect and why its not official
• Standard Chartered sees near-term gold consolidation, targets $3,100 before renewed rally
• Nikkei forecast to rise to 39,600 by the end of 2025 (vs. February forecast 42,500)
• Trump says working on taking Fannie Mae and Freddie Mac public, implicit guarantees remain
• AUD and RBA terminal rate both seen higher – headwinds for Australia to diminish
• Citi sees risks, and also opportunity, for equities from Trump’s “One big, beautiful bill”
• Trump will charge Canada US61bn to join Golden Dome if it remains a free country
• Forexlive Americas FX news wrap 27 May: USD moves higher with stocks. Yields move lower.
• ICYMI: China’s Premier Li said fiscal expenditure will reach a record high this year
• Wall Street Journal: US to grant Chevron license to retain Venezuela oil assets
• US major indices have a solid start to the holiday shortened week
• ICYMI: Goldman Sachs: Tariff-driven inflation likely to be short-lived
• NZDUSD moves lower ahead of the RBNZ rate decision
• Trade ideas thread – Wednesday, 28 May, insightful charts, technical analysis, ideas

Trump grabbed market attention with a series of posts on his social media platform amid scrutiny over allegations of profiting from issuing pardons. The posts appeared rushed, but one comment of note for markets was his renewed push to take Fannie Mae and Freddie Mac public. Importantly, Trump emphasised that the U.S. government would retain its implicit guarantees — a clarification not included in his previous remarks last week, when he said he was “seriously considering” taking the mortgage giants public.

From Tokyo, New York Fed President John Williams delivered remarks that suggest little appetite for rate cuts in the near term. He stressed that central banks must “respond relatively strongly” when inflation drifts from target, and warned against taking policy steps where the “cost of getting it wrong far outweighs the benefits,” especially given the high uncertainty around U.S. tariffs and trade policy.

Bank of Japan Governor Kazuo Ueda also spoke, flagging concern over recent volatility in Japan’s super-long bond yields. He noted that while shorter-term rates have more direct impact on economic growth, large swings in the long end could spill over and lift borrowing costs more broadly. Ueda added that fallout from US trade policy remains a significant source of uncertainty. That concern was reflected in the day’s 40-year JGB auction, which showed the weakest bid-to-cover ratio (2.2) since November and the softest demand since July.

Australia’s April monthly CPI came in a touch hotter than expected, with the headline holding steady at 2.4% y/y (vs 2.3% expected). The trimmed mean core measure rose to 2.8% y/y from 2.7% in March. While this is not the official quarterly inflation gauge used by the RBA — due in July — the data remains within the central bank’s 2–3% target band, keeping rate expectations finely balanced.

Across the Tasman, the Reserve Bank of New Zealand cut its official cash rate by 25 basis points to 3.25% in a 5–1 vote, as expected. The central bank now sees a slightly deeper easing path than it projected in February, with forecasts showing the cash rate at 2.92% in Q4 2025 and 2.85% in Q1 2026. The RBNZ warned that global uncertainties — particularly around U.S. trade policy — are expected to weigh on both international and domestic demand. NZD/USD moved higher in response and added further gains during Governor Hawkesby’s post-decision remarks, where he said policy is now in the “neutral zone” and not on a pre-set path.

The U.S. dollar strengthened modestly across the major pairs, extending Tuesday’s move — the New Zealand dollar being the notable exception.

This article was written by Eamonn Sheridan at www.forexlive.com.

China’s Vice Commerce Minister and Deputy International Trade Representative, Ling Ji, met with a group of German small and medium-sized enterprise (SME) representatives in Beijing on Tuesday. Ling highlighted that China’s vast consumer market, well-developed industrial supply chains, and dynamic tech innovation environment offer strong opportunities for German SMEs to invest and grow. He also expressed hopes that China and Germany will work together to uphold free trade, ensure stable global industrial and supply chains, and continue fostering mutually beneficial cooperation.

Info comes via Chinese state media, Global Times in this case.

This article was written by Eamonn Sheridan at www.forexlive.com.

The Wall Street Journal (gated) with the sobering report, here are their Key Points:

• Vladimir Putin’s war successes give him latitude to slow walk peace negotiations.
• Russia’s economy relies on military industry, making unwinding the war in Ukraine difficult.
• Neighbors fear Russia’s war economy might refocus on them if the Ukraine war ends.

And this:

• “It is absolutely imperative for Russia to continue to rely on the military industry, because it [has] become the driver of economic growth,” said Alexander Kolyandr, a senior fellow at the Center for European Policy Analysis. “For a while, it will be next to impossible for Russia to reduce military spending.”

Trump was all about ending the war on Ukraine on ‘day one’. Obviously that didn’t happen (as if anyone with half a brain believed him). And he is not having any success ending it now.

This article was written by Eamonn Sheridan at www.forexlive.com.

April 2025 monthly inflation CPI data from Australia

Comes in at 2.4% y/y

• expected 2.3%, prior 2.4%

Trimmed mean is 2.8% y/y

• prior 2.7%

A small tick higher for monthly inflation in Australia. In my preview earlier, and also down the bottom of this post, I have oputlined all the caveats surrounding this data. Still, a tick higher is a tick higher, so it doesn’t go into the good news bucket.

***

The monthly CPI data from Australia does not show all components of the CPI, that’ll have to wait for the quarterly data release (late in April).

• The monthly CPI indicator does, however, provide a timelier indication of inflation using the same data collected for use in the quarterly CPI. The monthly reading includes updated prices for between 62 and 73 per cent of the weight of the quarterly CPI basket, its not the full picture.

This article was written by Eamonn Sheridan at www.forexlive.com.