Articles

The trade war was never going to be one-and-done. Trump loves tariffs too much and has too long of a list of grievances.

The lack of progress on trade deals over the past two weeks was a red flag and the 90-day deadline was ticking ever closer. He’s left himself an ‘out’ here by delaying this to June 1 but at the same time, I think he’s handing some leverage to China here in negotiations. How many fronts does the US want to fight at once?

The past two weeks have been a wonderful, placid moment and a glimpse into what could be, but until Congress takes away Trump’s ability to impose tariffs, then this dance will continue.

This article was written by Adam Button at www.forexlive.com.

• Trump recommends a 50% tariff on EU.
• Says EU has been hard to deal with.
• Tariff would start on June 1st.
• No tariff if product is built or manufactured in US.
• Our discussion with them going nowhere.

It’s not been a secret that the EU would have been harder to deal with and Trump seems to get tired of it.

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

• Trump threatens tariffs on Apple if products not made in US

• ECB’s Lane: Confident services inflation will come down
• How have interest rates expectations changed after this week’s data?
• Bulgaria Advances Toward Euro Adoption
• ECB Q1 2025 negotiated wage indicator +2.38% vs +4.12% in Q4 2024
• ECB’s Rehn: June cut ‘appropriate’ if data confirm stabilisation of inflation
• France May consumer confidence 88 vs 93 expected
• Germany Q1 final GDP 0.4% vs 0.2% q/q expected
• UK April retail sales +1.2% vs +0.2% m/m expected
• ECB’s Stournaras: I see a June rate cut and then pause
• FX option expiries for 23 May 10am New York cut
• Trump pushes EU to cut tariffs or face extra duties – FT

It’s been a pretty boring session in terms of newsflow. The UK retail sales report was the only highlight. The data beat expectations by a huge margin with good weather cited as the main reason. Nonetheless, there’s been a strong positive trend in retail sales for several months.

In the markets, the most notable mover has been the US Dollar which extended the overnight losses. There was no catalyst since yesterday’s strong US PMIs, but the fact that the market has already repriced interest rates expectations in line with the Fed’s baseline for 2025 gives the greenback little support.

We will need more to trim the rate cuts bets further and give the USD a boost. That could come with the data in June when we get ISM PMIs, NFP and CPI before the FOMC Policy Decision.

For now, we could either range here or see more losses for the greenback. For today, we are already at the daily average range limit, so there shouldn’t be much follow through in the American session and chances of a pullback are higher.

Late in the session, Trump posted on Truth Social that he would impose 25% tariffs on Apple if the iPhones were not made in the US. That saw the AAPL stock dropping more than 3% in pre-market trading.

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

• iPhone’s that will be sold in the US will be manufactured and built in US, not India or anyplace else.
• If that’s not the case, a tariff of at least 25% must be paid by Apple to the US.

AAPL stock is down on the news.

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

Scheduled Maintenance Notification – May 31st, 2025

As part of our ongoing commitment to providing a seamless and secure trading experience, we will be performing scheduled system maintenance:

• Date: Saturday, May 31st, 2025 (All day)
• Start Time: 00:00 (server time)
• Estimated Duration: Up to 12 hours of intermittent service disruptions

What You Need to Know:

• Service Availability: During this time, all platform services — including trading, transactions, and account management — will be unavailable.
• Risk Management: To ensure smooth handling of your exposure, particularly for cryptocurrencies, please take any necessary actions or adjust your positions prior to May 31st, 2025.

In the meantime, our Support team is available to assist with any questions or clarifications you may have. We thank you for your patience and understanding as we work to enhance your trading environment.

Kind regards,
The IC Markets Team

The post Scheduled System Maintenance Notice first appeared on IC Markets | Official Blog.

• Fed: 51 bps (95% probability of no change at the upcoming meeting)
• ECB: 52 bps (94% probability of rate cut at the upcoming meeting)
• BoE: 39 bps (94% probability of no change at the upcoming meeting)
• BoC: 34 bps (70% probability of no change at the upcoming meeting)
• RBA: 68 bps (57% probability of rate cut at the upcoming meeting)
• RBNZ: 60 bps (90% probability of rate cut at the upcoming meeting)
• SNB: 50 bps (81% probability of rate cut at the upcoming meeting)

*for the SNB, the rest of the probability is for a 50 bps cut

Rate hikes by year-end

• BoJ: 15 bps (98% probability of no change at the upcoming meeting)

The key events that weighed on the market pricing this week were:

• RBA’s Bullock mentioning that they did discuss a 50 bps cut. That saw the market increasing the rate cut bets for the RBA from 54 bps to 68 bps by year-end.
• Canadian Core inflation data surprising to the upside. That caused the market to price out immediately a rate cut in June that was expected before the CPI release.
• Hot UK CPI data. The market took a less dovish view and favoured just one rate cut in 2025.

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

• Confident services inflation will come down.

Services inflation in the Eurozone has been stuck around 4% for well over a year. You can see it in the chart below.

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

Investor Update: Bulgaria Advances Toward Euro Adoption – Symbolic but Limited Impact on Euro Currency

Core News:
Bulgaria is making steady progress toward adopting the euro by January 1, 2026. The country has met most Maastricht criteria, including public debt limits, fiscal discipline, and exchange rate stability. The main remaining challenge is elevated inflation, while political stability is also seen as critical for ensuring a successful transition. Despite recent debate—including a proposed national referendum—the trajectory remains broadly on course.

Implications for the Euro Currency:

• Marginal Economic Impact: Bulgaria’s economy is relatively small compared to the broader eurozone. As such, its inclusion is unlikely to significantly shift the euro’s macro fundamentals or valuation in FX markets.

• Already Pegged: Since 1999, the Bulgarian lev has been pegged to the euro via a currency board, meaning the transition to full euro adoption will likely have minimal exchange rate volatility.

• Symbolic Significance: Bulgaria’s accession reinforces confidence in the euro project. In an environment where some countries have questioned deeper integration, Bulgaria’s move is a political signal of continued EU cohesion and currency appeal.

• Banking System Already Integrated: Bulgaria has participated in the ECB’s banking union and supervision mechanisms for several years. This lowers systemic risk and supports a smoother monetary policy transition.

Potential Risks and Internal Frictions:

• Catch-Up Inflation: Price level convergence with eurozone averages could trigger a one-time inflationary jump in Bulgaria, a common concern in smaller economies joining the bloc.

• Implementation Risks: BNB official Iliya Lingorski warned of logistical hurdles, including software upgrades and infrastructure overhauls. These could complicate the rollout timeline.

Investor Takeaway:
Bulgaria’s euro adoption will not materially impact the euro’s strength or stability, but it does offer a symbolic boost to EU integration and policy credibility. For investors, the transition reduces currency risk in Bulgaria, supports long-term capital inflows, and confirms eurozone resilience. However, watch for short-term volatility tied to political developments and inflation dynamics within Bulgaria.

This article was generated at ForexLive.com (evolving to be investingLive.com at the end of this year)
with the assistance of AI and may contain factual or contextual inaccuracies. It should not be solely relied upon without verification.

This article was written by Itai Levitan at www.forexlive.com.

• ECB Q1 2025 negotiated wage indicator +2.38%
• Prior +4.12% in Q4 2024

Wage growth is a lagging indicator but will keep the policymakers’ conviction on a return to target high.

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

• June cut ‘appropriate’ if data confirm stabilisation of inflation, weak growth.
• Given the uncertain environment, the ECB should stick to its data-dependent approach.

The next inflation data for the Eurozone should be key but I still think that a cut in June would be taken as a mistake by the market and lead to further rise in long term yields.

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

• Prior 92 (revised to 91)

Consumer confidence has been falling steadily since the start of the year amid the trade war. We haven’t reached the trough yet but things could start to reverse in the next months. We’ll see.

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

IC Markets Europe Fundamental Forecast | 23 May 2025

What happened in the Asia session?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

What does it mean for the Europe & US sessions?

Consumer spending in the U.K. has slowed for two successive months with sales rising just 0.4% MoM in March – categories such as clothing and garden supplies stores led the gains. This trend is expected to gain further traction as the forecast for April points to another ‘soft’ increase of just 0.3%. Despite a slowdown in retail sales in 2025, Cable remains lifted due to the broad weakness in the greenback.

Germany’s economy expanded by 0.2% in the first quarter of 2025, in line with market forecasts and rebounding from a 0.2% contraction in the previous quarter, according to preliminary data. This recovery was driven by softer inflation and reduced borrowing costs, which supported stronger domestic demand. Both business and consumer confidence improved, buoyed by optimism over the successful completion of coalition negotiations and the establishment of a stable government – factors that helped counterbalance persistent concerns about unpredictable U.S. tariff policies.

After declining in January and February, retail sales in Canada rose by 0.7% MoM in March, according to preliminary estimates. The largest increases were seen in categories such as food and beverage retailers, and miscellaneous store retailers. The final estimate now points to consumer spending growing at a monthly rate of 0.6%, slightly lower than the preliminary estimate. Should sales slow more than originally anticipated, this result could weigh on the Loonie later today.

The Dollar Index (DXY)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from DXY today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 7 May 2025.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run, but uncertainty around the economic outlook has increased further.
• The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
• Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 17 to 18 June 2025.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

New Home Sales (2:00 pm GMT)

What can we expect from Gold today?

Following a drop of 9.2% MoM in January, sales for new homes rebounded in February and March, rising at a monthly rate of 3.1% and 7.4% respectively, with 724,000 units sold in the most recent data point. However, April’s forecast points to a decline in sales with 694,000 homes projected to be snapped up, marking a potential decline of 4.1%. Should new home sales fall more than originally anticipated, the dollar could come under even further overhead pressures. After rallying more than 4% this week, demand for gold dampened slightly on Thursday as spot prices retreated from the overnight high of $3,345/oz. This precious metal was hovering around $3,300/oz at the beginning of Friday’s Asia session but it looks set to close in the green for the second time in three weeks.

Next 24 Hours Bias

Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

Despite a slowdown in Composite PMI activity for the second consecutive month as reported in Thursday’s flash report, the Aussie remained elevated as it hovered above 0.6400, primarily due to a significant weakness in the greenback. After declining over the last couple of weeks, this currency pair looks set to register its weekly gain by the end of today’s trading session.

Central Bank Notes:

• The RBA reduced its cash rate by 25 basis points (bps), bringing it down to 3.85% on 20 May, following a pause on 1 April.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Data on inflation for the March quarter provided further evidence that inflation continues to ease. At 2.9%, annual trimmed mean inflation was below 3% for the first time since 2021 and headline inflation, at 2.4%, remained within the target band of 2 to 3%.
• While recent tariff announcements have resulted in a rebound in financial market prices, there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries, contributing to a weaker outlook for growth, employment and inflation in Australia.
• Private domestic demand appears to have been recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggests that labour market conditions remain tight. Employment is continuing to grow, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers.
• Looking through quarterly volatility, wage growth has softened over the past year or so but productivity growth has not picked up and growth in unit labour costs remains high.
• There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments. While the central projection is for growth in household consumption to continue to increase as real incomes rise, recent data suggest that the pick-up will be a little slower than was expected three months ago.
• There is a risk that any pick-up in consumption is even slower than this, resulting in continued subdued growth in aggregate demand and a sharper deterioration in the labour market than currently expected.
• With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate, assessing that this move would make monetary policy somewhat less restrictive.
• The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
• The next meeting is on 8 July 2025.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

Retail Sales (10:45 pm GMT 22nd May)

What can we expect from NZD today?

Consumer spending in New Zealand had been deteriorating since the beginning of 2022 but retail sales jumped at a quarterly rate of 0.9% in the final quarter of last year. Not only did this increase surpass market forecasts of a 0.6% gain, but it also marked the highest receipts in three years. This upward momentum in consumer spending continued in the first quarter of this year as sales rose 0.8% QoQ and outperformed market expectations of a 0.1% increase. The largest contributors to the rise were motor vehicle and parts retailing, pharmaceutical and other store-based retailing, and clothing, footwear, and personal accessories. Stronger sales should spur further demand for the Kiwi, keeping this currency pair elevated on the final day of trading.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.50% on 9 April, marking the fifth consecutive rate cut.
• The Committee assessed that annual consumer price inflation remains near the midpoint of the MPC’s 1 to 3% target band while firms’ inflation expectations and core inflation are consistent with inflation remaining at target over the medium term.
• Economic activity has evolved largely as expected since the February Monetary Policy Statement; higher-than-expected export prices and a lower exchange rate have supported primary sector incomes and overall economic growth.
• Although monetary restraint had been removed at pace, household spending and residential investment have remained weak.
• The recently announced increases in global trade barriers weaken the outlook for global economic activity. On balance, these developments create downside risks to the outlook for economic activity and inflation.
• The Committee noted that the increase in tariffs will take time to work through the global economy, but the direct price increases for economies imposing tariffs and the dampening impact of increased economic uncertainty on global demand will occur relatively quickly.
• With CPI inflation close to the mid-point of the target range, significant spare capacity in the economy, and a weaker activity outlook stemming from global trade policy, the Committee agreed that a further reduction in the OCR was appropriate.
• Meanwhile, future policy decisions will be determined by the outlook for inflationary pressure over the medium term.
• The next meeting is on 28 May 2025.

Next 24 Hours Bias

Medium Bullish

The Japanese Yen (JPY)

Key news events today

National Core CPI (11:30 pm GMT 22nd May)

What can we expect from JPY today?

Japan’s National Core CPI has now accelerated for the second successive month, rising from an annual rate of 3.2% in the prior month to 3.5% in April, surpassing the forecast of a 3.4% increase. The rising price pressures are attributed to a culmination of factors such as surging food prices, reduced energy subsidies and higher import costs. Coupled with ongoing demand for safe-haven assets, the yen continued to see strong inflows with USD/JPY hitting an overnight low of 142.80 before settling around 143.80 in early trading on Friday.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Medium Bearish

The Euro (EUR)

Key news events today

Germany GDP (6:00 am GMT)

What can we expect from EUR today?

Germany’s economy expanded by 0.2% in the first quarter of 2025, in line with market forecasts and rebounding from a 0.2% contraction in the previous quarter, according to preliminary data. This recovery was driven by softer inflation and reduced borrowing costs, which supported stronger domestic demand. Both business and consumer confidence improved, buoyed by optimism over the successful completion of coalition negotiations and the establishment of a stable government – factors that helped counterbalance persistent concerns about unpredictable U.S. tariff policies.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Rising U.S. debt levels and credit downgrades continue to spur demand for safe-haven assets such as the franc. USD/CHF had declined over 1.5% by Wednesday before finding its footing around 0.8280 on Thursday. Inflows for the franc remain strong and this currency pair is likely to resume its downward momentum on the final trading day of the week.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Medium Bearish

The Pound (GBP)

Key news events today

Retail Sales (6:00 am GMT)

What can we expect from GBP today?

Consumer spending in the U.K. has slowed for two successive months with sales rising just 0.4% MoM in March – categories such as clothing and garden supplies stores led the gains. This trend is expected to gain further traction as the forecast for April points to another ‘soft’ increase of just 0.3%. Despite a slowdown in retail sales in 2025, Cable remains lifted due to the broad weakness in the greenback.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 5 to 4 to reduce the Bank Rate by 25 basis points (bps), bringing it down to 4.25% on 8 May 2025.
• Two members preferred a larger cut of 50 bps, while two opted to hold rates steady at 4.5%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Progress on disinflation in domestic price and wage pressures is generally continuing. Twelve-month CPI inflation fell to 2.6% in March from 2.8% in February, close to expectations in the February Report.
• Although indicators of pay growth remain elevated, a significant slowing is still expected over the rest of the year.
• Wholesale energy prices have fallen back since the February Report. Previous increases in energy prices are still likely to drive up CPI inflation from April onwards, to 3.5% for 2025 Q3, but is expected to fall back thereafter.
• Underlying UK GDP growth is judged to have slowed since the middle of 2024 and has been much less volatile than growth in headline GDP – growth was expected to have been around zero in 2025 Q1, well below Bank staff’s projection for headline growth of 0.6%.
• Underlying employment growth has also softened recently and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level – the impact of higher Employers’ National Insurance Contributions (NICs) on employment appears to have been fairly small to date.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

Retail Sales (12:30 pm GMT)

What can we expect from CAD today?

After declining in January and February, retail sales in Canada rose by 0.7% MoM in March, according to preliminary estimates. The largest increases were seen in categories such as food and beverage retailers, and miscellaneous store retailers. The final estimate now points to consumer spending growing at a monthly rate of 0.6%, slightly lower than the preliminary estimate. Should sales slow more than originally anticipated, this result could weigh on the Loonie later today.

Central Bank Notes:

• The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% – marking the first pause after seven consecutive meetings where rates were reduced.
• The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
• Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally – the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy.
• In the first scenario, uncertainty is high but tariffs are limited in scope – Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
• Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the U.S., the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the Euro Area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
• In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war and the Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 4 June 2025.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

After gaining 9.2% over the last couple of weeks, oil prices are now expected to register a third decline in five weeks due to oversupply concerns. Earlier this month, OPEC+ agreed to accelerate oil output hikes for a second consecutive month in June as the group looks to punish over-producing members. OPEC leaders are also contemplating a similar increase in July, and could bring back as much as 2.2 million barrels-per-day (bpd) of supply to the market by November, as per a Reuters report. A secondary objective of the OPEC+ supply hikes is to win back market share from U.S. producers, who ramped up output to record levels in recent years while the OPEC+ was making deep supply cuts. Following a high of $64.19 on Wednesday, WTI oil tumbled over 6% by the end of Thursday – this benchmark had stabilised around $60.80 per barrel in early trading on Friday but the downward momentum is likely to pick up as the final trading day progresses.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Europe Fundamental Forecast | 23 May 2025 first appeared on IC Markets | Official Blog.