Bitcoin is experiencing a rise in value, benefiting from a weakened US dollar. The value has reached its highest point since the end of January, surpassing USD 106,400.

Other currencies, including the Euro, Japanese Yen, Australian Dollar, New Zealand Dollar, Canadian Dollar, and British Pound, are also up. Gold prices are on the rise as well.

Moody’s Us Credit Rating

Moody’s has downgraded the US credit rating. This move does not affect the cost of issuing US Treasuries.

Countries such as Qatar, Saudi Arabia, and the UAE are reportedly not worried about the downgrade. The global financial landscape sees varied responses to these developments.

What we’re seeing here is a moment where broader macroeconomic shifts are injecting new momentum into digital assets, especially Bitcoin. The rise past the end-January highs, pushing above USD 106,400, did not come out of nowhere—it’s riding on the back of a weakening US dollar. That’s not merely a coincidence; it’s often expected that when the dollar softens, demand for alternatives with a fixed supply sees a boost. With gold also climbing, investors seem to be seeking safety or holding value elsewhere, and it’s reflecting clearly in price action.

Moody’s recent decision to cut the US credit rating doesn’t automatically raise the cost of issuing government debt, and historically these moves tend to have more symbolic than immediate economic consequences. Nonetheless, it can change how investors around the world feel. That’s where the real shift happens—from perception. Yet countries like Qatar and Saudi Arabia haven’t flinched publicly, which tells us something. Confidence isn’t evaporating overnight in every corner.

For those of us watching derivatives tied to digital assets, these macro changes are not just side noise. The direction of the dollar impacts volatility metrics and skews, and right now we’re seeing implied vol curves adjust to that pressure. Short-dated options, especially in BTC, are beginning to hold more premium again, with slightly steeper OTM call pricing. This reflects anticipation, not fear—but anticipation can be just as tradeable.

Global Financial Outlook

As gold picks up steam, it signals that hedging behaviour across assets is rising. That tends to spill over into crypto markets, particularly in how leverage is deployed. Funding rates are creeping, open interest has nudged higher, but it’s the put-call ratio we’re considering closely. There’s been a steady nudge lower, which typically suggests leaning bullish. Still, volume near strikes just above this new high is growing, a sign that traders are building positions where they think resistance could settle next.

With other majors like the Euro and Yen gaining as well, there’s a wider cycle playing out. Pair performance is one thing, but in derivatives, it’s the chemistry between interest rates, macro headlines, and sensitivity to risk that creates setups. When the dollar weakens alongside a US rating cut, those layers tend to align—and volatility doesn’t need to collapse for positions to pay.

Looking forward, one ought to monitor weekly expiry flows. Positions in the front end may squeeze quickly when momentum builds after macro triggers. Keep an eye on how IV shifts after CPI releases or any further remarks from credit agencies. The recent rating cut may have shown little immediate impact on bond issuance costs, but if sentiment begins to drift in trading rooms globally, we are likely to see it reflected in curve steepness and upward gamma exposure.

Watch also how Asian sessions respond in the coming days. We’ve often seen initial signs of repositioning come from early-market hours where liquidity is thinner and moves exaggerate. The way these early candles form post-downgrade—and how tightly correlated BTC remains to gold movements—might well hint at whether this move still has legs or is overextended.

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NVIDIA’s stock broke the 131.42–134.48 demand zone, closing at 135.32 on May 16. The price now has potential to reach the 163–174 range due to AI data-centre demand and institutional activity.

The value area between 115.43 and 126.48 serves as a strong support level. The volume-weighted average price (VWAP) has remained bullish, indicating accumulation over recent months.

Technical analysis shows NVDA is re-entering a medium-term bullish channel, with recent highs supporting upward momentum. Resistance levels are at 139.42, 142.47, 153.13, and the 163.40–174.45 channel boundary.

AI and data-centre demand propels fundamental growth, with Q1 data-centre revenue soaring 427% YoY, reaching $22.6 billion. Consensus anticipates further revenue growth to ~$28 billion in Q2 with subsequent earnings growth through FY 2026.

The trading plan includes aggressive or conservative entries based on price movements, with stop-losses and profit-taking strategies outlined. Upcoming catalysts include May 28 earnings, AI spending updates, and geopolitical regulations affecting trade.

The article highlights a few very precise movements in NVIDIA’s stock. On the 16th of May, it finished the trading session at 135.32, which is just above a previously noted demand area between 131.42 and 134.48. That matters because it suggests the price has pushed through a short-term barrier and could continue higher. Traders had been watching that level closely—now that it’s cleared and held, it opens the door for tests into the 163 to 174 range. These aren’t arbitrary figures—they’re defined by earlier volume action and prior rejection areas, which tend to settle into reliable guardrails during fast-moving trends driven by strong narratives, like artificial intelligence.

Below that, a lower support floor exists between 115.43 and 126.48. This range held during the last pullback and saw volume buying enough to tip the VWAP upwards—another clue that longer-term accumulation might be occurring underneath. When VWAP stays firm and points higher, it typically reflects that buying interest remains even on quieter days. It suggests a bias in positioning.

From a structural angle, the chart points to price moving sideways before curling back into a medium-term upwards channel. The trajectory has been re-established, with higher highs and higher lows visible now. The next static resistance levels, based on price memory, sit at 139.42, 142.47, and further above at 153.13. The upper edge of the breakout channel ends near 174. These aren’t merely psychological marks—they’ve seen action before, and sellers might reappear there.

Looking at the rationale beneath the chart, the driver behind this steady expansion is the company’s increasing role in artificial intelligence infrastructure. First quarter revenue from data-centre applications – essentially the backbone of AI computing – grew 427% year-on-year, coming in at $22.6 billion. The consensus on the street points to nearly $28 billion in revenue expected next quarter, on track with a narrative of consistent upward revision. That growth is not simply speculation; it’s backed by orders and deployment capability, which pushes earnings estimates higher into the next two financial years.

For traders bent on derivatives, the moves in price should be tied tightly to defined risk limits, using tactical entries. The strategy being laid out here provides room for both aggressive entries on breakouts and more cautious setups on pullbacks to support, with clear invalidation points via stop-loss boundaries. Profit targets are layered at each resistance level, giving multiple zones to manage partial exits, depending on trade horizon.

We should watch key dates—especially 28 May—with increased attention. That’s the earnings release, and it marks the next major inflection point for expectations. Additionally, when AI spending updates cross the wire or rules shift around chip exports and international trade, those elements may amplify volatility. These external factors won’t move the trend alone—but they can cause acceleration or temporary compression, which must be built into any options strategy or hedging framework.

The US dollar is projected to decline as trade tensions, policy uncertainty, and slowing GDP growth affect confidence and demand for US assets.

Estimates indicate a 10% drop against the euro and 9% declines versus the yen and pound in 2025. Tariffs might affect US firms’ profit margins and consumer incomes, impacting the dollar’s value.

Foreign Investor Confidence

Consumer boycotts and reduced tourism further strain GDP. Strong foreign spending and weaker US performance have prompted movement out of US assets.

Foreign central banks are decreasing their dollar holdings, with potential for private investors to follow. Tariffs are predicted to economically burden the US if supply chains and consumers remain inflexible.

A suggested 10% universal tariff isn’t certain but remains a possibility amid ongoing trade issues. These dynamics offer new scenarios compared to the previous administration.

What we’ve seen here is a clear picture of strain developing on the currency—pressure that can no longer be dismissed as temporary or isolated. The US dollar, under current policy pressures, appears to be weakening as confidence erodes. Global investors are closely monitoring tariff announcements, shifting macroeconomic data, and central bank behaviour as keys to near-term foreign exchange movements.

A projected 10% slide against the euro, alongside similar drops against the yen and pound, reveals more than fluctuations in perception—it’s sentiment recalibrating based on reduced growth potential and widening imbalances. Simply put, if trade barriers continue to strain supply chains and suppress disposable incomes, then currency weakness is a reflection of those inefficiencies being priced in. For us, expecting noise in rates and divergences in spreads seems not only reasonable, but necessary.

Once large-scale capital retrenchment begins, it’s rare for it to stop halfway. Wang’s observations regarding fewer reserves held in dollars by foreign central banks is likely a harbinger, not an anomaly. History tells us that private capital often mirrors those moves slightly delayed. There’s a psychological anchoring that breaks only when sustained losses make hesitation costlier than action. That’s why any bouts of dollar strength at this stage should be seen as corrective, not durable, unless we see a systemic policy reversal or growth upside—which isn’t being forecasted.

From a positioning perspective, any instruments pegged or heavily reliant on USD performance should now be stress-tested against forward estimates, not backward returns. While a 10% universal tariff might not be enacted imminently, the fact that it rises as a plausible policy option creates enough of a drag to reshape speculative pricing. Predictability in trade has been replaced by rolling negotiations, and that alone keeps volatility on the menu.

Changing Market Dynamics

Markets under the prior administration had different assumptions baked in, particularly around deregulation and capital repatriation. That no longer seems to be the case, which materially changes how risk is distributed across currency pairs. With lower real yields and a decelerating growth base, asset flow dynamics are shifting toward markets perceived as more stable or offering greater return per unit of volatility. That’s what Xu pointed to, and recent portfolio reallocations support the shift.

In the near term, cleaner price action may appear briefly—but reduced liquidity in certain pairings, particularly high-beta ones, could introduce slippage risks that aren’t visible in headline volumes. Tighter stops and staggered entries might help manage exposure here. Gujar’s price targets could now come in sooner than expected, particularly as trade decisions roll forward without an offsetting domestic stimulus on the horizon.

In recent weeks, we’ve noted that even G10 currencies are beginning to show stress behaviours usually reserved for emerging markets. This suggests a recalibration of correlation is underway. Kelly’s models make clear that volatility isn’t responding strictly to data prints, but to policy tone and investor intent, which explains the recent dislocation between rate probabilities and actual FX movement.

So far, margin compression across industrials hasn’t fully hit equity valuations, but pressure is bubbling just under. That’s a signal warranting closer inspection for anyone using synthetic positions tied to currency hedges. The longer sentiment remains tethered to protectionist rhetoric, the more momentum builds against dollar-linked exposures.

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The Nasdaq-100 Futures have set a sturdy weekly base with a key point of control (POC) at 21,315, serving as a pivotal point for potential market movement. The price exhibited a temporary halt, forming minor consolidation between 21,434 and 21,947, just below the rising regression channel.

Important resistance levels are identified, with the immediate being 21,434, while further resistances are positioned at intervals like 21,497, 21,575, and 21,631. On the flip side, immediate support lies at 21,315 with secondary supports following at 21,169 and 21,077, and further below within the 21,331 to 20,502 range.

Bullish and Bearish Scenarios

In the bullish scenario, a hold and bounce at the POC can prompt a long entry, targeting a series of upward levels with stops set just below 21,300. Conversely, a break and reclaim at 21,434 allows for aggressive long entries, targeting higher resistances.

In a bearish scenario, failure at the 21,434–21,497 zone can initiate short positions, targeting several lower levels. Additionally, a drop below the POC/VWAP confirms a value shift downward, suggesting lower targets.

The Monday execution plan includes setting pre-market alerts at key levels. A focus on volumes at these pivots is advised, coupled with stringent risk management per setup, adapting to channel respect based trends.

With the Nasdaq-100 Futures establishing a firm weekly foundation at 21,315, this area now acts as a sort of launching point — a weighted average where most recent volume and price action collided, giving it added importance. The current behaviour of price around this level suggests that market participants have accepted it as fair value, at least for now. Above this zone, the market attempted to press higher but met some hesitation in a tight range between 21,434 and 21,947, indicating a hesitation to commit in either direction just under a sloping upward channel.

Understanding Key Price Levels

Given this structure, one can interpret the 21,434 marker not as mere resistance, but as a short-term decision-making zone. If the price rotates firmly through it, volume accumulation will become essential. A move up without meaningful backing from traded volume tends to unravel. But if participants continue to treat this area as reasonable for buying, we might expect cascading targets at 21,497, 21,575, and perhaps 21,631 to be tested in sequence.

On the downside, the 21,315 support should not be treated lightly. If it caves without a fight, there’s a direct pathway to 21,169, and if that too breaches with velocity, the market might swiftly revisit the 21,077 region, potentially unwinding further into a broader zone that bottoms out near 20,502. That would serve as an indicator that sentiment may have shifted more broadly, not just a short-term retracement.

From the way price has behaved above and around the point of control, we can prepare to approach upcoming sessions with a clear preference for reactivity over anticipation. If the market floats above 21,315 and shows signs of strength — such as repeated defended tests near prior resistance — long positions become viable, assuming stops are tucked beneath 21,300 or close to it. However, strength without support on the lower timeframes often leads to punishing reversals.

Should 21,434 break and reclaim, it opens the door for quicker decisions. The path upward isn’t wildly open, though. Each level beyond that is not just a mechanical target — these are zones where volumes compacted in past auctions. One might expect friction at each point unless overriding momentum steps in.

Conversely, sharp rejection or lack of follow-through at the 21,434–21,497 region would indicate buyers remain cautious or sparse. That rejection can very realistically trigger scalps to the short side with the expectation that we start to chew down through the thin volume zones below the POC. Price below both the POC and the VWAP, especially with an accelerating volume profile, tells us value is being accepted lower, often a precursor to quick-range expansions southward.

As we look ahead to early-week execution, it’s not enough to simply mark levels — alerts and triggers should be laid out beforehand during pre-market preparation. Watching closely how the futures behave as they approach or bounce from these levels, along with matching those behaviours to volume imprints or absorption signs, can help build confidence in a directional stance.

Whatever the strategy, the key is maintaining adaptability rather than loyalty to a directional bias. The regression channel’s respect—or eventual negation—will carry weight. We must continue to gauge velocity of moves with volume and keep risk settings mechanical and position-specific. With the groundwork laid, it’s execution and consistency that will separate performance from noise in the week ahead.

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In May 2025, UK house prices saw a monthly increase of 0.6%, compared to a previous rise of 1.4%. Year-on-year, prices grew by 1.2% following a 1.3% increase the year before.

The average house price reached a new record high, although it marked the slowest monthly growth for May in nine years. The market experienced the largest number of homes for sale in a decade.

Demand And Supply

Demand in April decreased by 4% compared to April 2024. This drop followed the end of a tax incentive for purchases of cheaper homes and for first-time buyers on 1 April.

The current data points to a cooling off in housing market momentum. While there was still progress—prices edging up by 0.6% during May—the pace has slowed sharply when compared with the previous month’s leap of 1.4%. On an annual basis, the increase slipped to 1.2%. That figure alone may not raise eyebrows, but it does suggest that whatever steam had been building in earlier phases of growth may now be fading.

Price-wise, we’re now looking at a new high for average homes. However, it’s worth flagging that this was the weakest May for monthly growth across nearly a decade. Buyers, it seems, are becoming more reserved. Sellers, on the other hand, have rushed in. With the number of homes available at its highest in ten years, supply has clearly ballooned—even if enthusiasm has not matched it on the demand side.

That swing in supply versus demand pushed through as early as April. Figures show a 4% drop in buyer activity compared to the same month in 2024. This isn’t mere fluctuation—it directly followed the withdrawal of government incentives. The benefit had been aimed at cheaper properties and those entering the market for the first time. With this support mechanism removed at the start of April, enthusiasm dulled almost immediately.

Market Stability And Future Expectations

For us, this suggests more stable—but less speculative—conditions ahead. We’re reading the slower price gains and the subdued demand as foundational rather than fading. Stocks of available property are still high, giving those active in the market more room to manoeuvre.

Savills’ position hints that the impact of costlier borrowing has largely filtered through, with expectations for rate cuts already shaping sentiment on upcoming deals. The head of research there noted that, although rate reductions by the Bank of England have not materialised yet, anticipation alone has created some confidence.

Halifax’s chief analyst added that stronger wage growth could allow households to absorb current mortgage costs slightly more comfortably. But any larger adjustments, according to her, would depend on actual improvement in affordability ratios rather than speculation.

Meanwhile, Office for National Statistics data from earlier this spring had already pointed to price dips in rental sectors, particularly in London. That can feed forward into the sales market as pressure on landlords adjusts their portfolio decisions.

Given what we’re seeing in liquidity and forward pricing, near-term expectations should tilt calmly. Spreads are not widening aggressively. Activity in the contracts that hinge on housing price indices appears more based in scheduled data than sentiment-driven spikes.

In practical terms, this sets us up with measurable boundaries rather than open-ended volatility. The track ahead doesn’t seem packed with shocks—but there is plenty of room for adjustment as newer surveys come in. A careful watch should remain on affordability indicators, earnings data, and the next moves on rate policy.

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The S&P 500 Futures have key levels to monitor, with the major resistance at 6,000, alongside other levels including a secondary support at 5,917. The Volume Profile’s point of control (POC) is around 5,904, essential for maintaining bullish momentum.

Despite a recent pullback, the uptrend continues, as the price remains above the VWAP mid-line. A decline below 5,969 suggests profit-taking, setting up for a Monday test of the POC/VWAP.

Scenarios For Bullish And Bearish Trends

For bullish scenarios, a reclaim of 5,960 could lead to targets of 6,000. Alternatively, a bounce from 5,904 could aim towards 5,932. For bearish situations, a retreat from the 5,969–5,977 zone could target 5,904, or a break below 5,904 could reach lower levels like 5,870.

Risk management advises keeping trade risks below 1% and using volume for entry confirmation. Attention to geopolitical influences is suggested due to the impact on the market’s open. Pricing is subject to change, and trading in foreign exchange can involve below-risk considerations, including leverage effects. Caution is advised, considering the possibility of total investment loss.

What we’ve seen over the past sessions is a steady grind upwards, even as short-term corrective movements have entered the picture. The index remains comfortably positioned above the VWAP’s mid-line, which strengthens the broader bullish argument—at least for now. The most immediate takeaway is that, though price has cooled from its recent highs, we haven’t observed a structural shift in direction. Momentum, while having flattened somewhat, hasn’t reversed.

Smaller timeframes reflect a degree of hesitation between the 5,960 and 5,977 region. This zone has become an active battleground. If current levels fail to hold and we slip beneath 5,969, we expect more mechanical players to step aside temporarily, triggering downside motion. This introduces the possibility of a move toward the POC near 5,904, which remains an area of balanced activity. In straightforward terms, buyers and sellers seem to agree most at that price, making it a likely candidate for reaction should momentum fade further.

Jackson’s earlier guidance on risk suggests limiting exposure to below 1% per position, particularly during overlapping data periods or when liquidity thins out, such as the tail end of New York hours. When set against increased volatility, as seen last week during unexpected foreign policy headlines, this advice becomes more than textbook caution—it’s actionable strategy.

Approaching Potential Market Moves

As for setups moving into next week, if price retests 5,904 and generates buy interest—ideally through a spike in volume crossing a 15-minute VWAP—there’s an opportunity to aim back toward 5,932. Should 5,960 fold back under pressure early Monday, then what had looked like bullish consolidation could switch to directional shorts. Much of this depends not on sentiment, but how aggressively price interacts with the volume-weighted levels.

Patel’s suggestion that the bounce near 5,917 formed a structural support carries merit, especially as it’s aligned with the lower volume node from last Thursday’s session. We lean towards a watch-and-wait approach here—only initiating positions when clear rejection of highs or lows is confirmed by order flow. It’s tempting to pre-empt moves, but thin-volume fills have led to slippage and unconvincing breakouts.

This environment favours decision-making based on real-time data, not static assumptions. We’re approaching zones where options positioning, especially around the psychological 6,000 mark, could lead to pinning effects. We recommend tracking the changes in open interest daily across weekly expiries, which often cues short gamma-driven moves especially on Mondays and Thursdays.

Given how geopolitical events influenced last week’s market reaction, staying informed of international developments remains essential. This includes not only headline risk but also early indications from currency markets, which often sniff out risk sentiment changes before index futures respond. If slight downticks in risk assets coincide with widening spreads or accelerated yen strength, it’s worth reconsidering any aggressive long entries near resistance areas.

For any momentum-based execution, waiting for volume confirmation—volume being above the rolling session average—is not just a safety net but a filtering tool. Without it, legitimate signals become indistinct from noise. Let participant activity validate the bias before acting.

What streams through each of these triggers is not binary—but a probability-weighted idea set. Moves toward 5,870 or above 6,000 require more than directional conviction; they require liquidity confluence and trader commitment. Let’s focus on behaving like observers first, then participants. When liquidity tightens, emotional reaction needs to be the last response.

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In the first quarter, New Zealand’s Producer Price Index (PPI) Inputs increased by 2.9% from the previous quarter, which had seen a decline of 0.9%. PPI Outputs rose by 2.1%, in contrast to a prior drop of 0.1%.

The largest contributions to output increases came from electricity, gas, water and waste services, which soared by 26.2%. Manufacturing outputs increased by 2.3%, while rental, hiring and real estate services climbed by 1.4%.

Key Input Contributions

For inputs, electricity, gas, water and waste services saw a substantial rise of 49.4%. Inputs for manufacturing went up by 1.7%, and construction inputs increased by 0.6%.

The PPI measures average prices received by producers for outputs, which include goods and services sold either to other businesses or to consumers. Rising PPI Outputs could indicate inflationary pressure, as higher prices for goods and services may not be passed on to consumers.

The PPI Inputs measure average prices paid by producers for raw materials, services, and capital goods, obtained domestically or imported. When PPI Inputs increase, it suggests higher production costs, potentially leading to increased consumer prices if producers decide to pass these costs on.

This data points to a sharp turnaround in producer pricing dynamics, with prior downward movements giving way to several areas of steep price expansion. The shift seen in both input and output metrics suggests that pressures are mounting at different stages of the production process. In particular, what’s caught our attention is the energy-related spike — both on the cost side and the selling price side — which can’t be ignored. A 49.4% increase in input costs for utilities is abnormally high and is likely to affect multiple product chains, not only the direct providers. When expenses climb like this, it means more than a sector-specific issue; it reads more like a ripple that could impact broader areas.

Manufacturing costs also progressing upward, albeit at a slower pace of 1.7%, adds pressure of a different tone. Unlike energy, where costs can fluctuate more widely, manufacturing pricing tends to be slower-moving and more stable. The fact that both inputs and outputs here ticked up signals producers finding less room to absorb those increases internally. It serves as an early marker that margins could become tighter if relief doesn’t come quickly.

Implications For Construction

Meanwhile, construction inputs only showed a slight increase, around 0.6%. Though much lower than in other sectors, it still points to cost accumulation rather than relief, and the slow climb in framing structures, labour, and raw materials often leads to delayed pressure elsewhere — particularly in housing markets and related finance products. This sector tends to react on a lag, and it’s worth watching closely.

Now, when looking at outputs, what stands out beyond the utilities jump is the 2.3% lift in manufacturing output prices. Seeing outputs rise in line with or faster than inputs suggests a pass-through of costs further down the chain. Producers may be raising end prices not only in response to costs, but also in anticipation of further inflation. The supply chain may already be pricing in a less favourable cost environment in the months ahead.

Hodgson’s earlier comments, that rising output does not always mean higher retail inflation, do warrant consideration here. But even allowing for that, the magnitude and speed of increases this time suggest something more persistent is in play.

As price movements have been driven by clearly measurable input surges — not vague demand pulls — action must be aligned accordingly. We are not dealing with forward-looking sentiment pricing alone. The output rises appear grounded in hard numbers upstream, especially from utilities.

In this context, heightened short-term volatility should be expected. Price-sensitive instruments tied to producer margins are likely to sway more than usual, owing to uncertain pass-through levels. Yield spreads that depend on stable manufacturing input-output relationships may fluctuate. We should be especially attuned to how commodity-backed contracts or energy-intensive derivatives behave over the next few data periods.

From a structural pricing view, there’s an obvious tilt. As the upstream cost pressures emerge, hedging strategies around energy inputs might shift, while we anticipate re-evaluation of break-even levels in trades tied to the manufacturing and utility sectors. These movements, while sharp now, might still be absorbed — but the question focuses less on whether adjustment occurs and more on speed and depth.

Given where the trajectory sits, layering shorter tenors with longer-dated conditional instruments might restore some balance and avoid overexposure to a single cost component. The next few releases will confirm whether this was a one-off jump or part of a longer trend — until then, keep allocations nimble and interpretation anchored in price mechanics, not just surface-level trends.

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Gold Prices and Geopolitical Tensions

The New Zealand Producer Price Index for the first quarter exceeded expectations, registering a 2.1% quarterly increase. This was a substantial rise compared to the anticipated 0.1% increase.

EUR/USD dropped to three-day lows, reaching around 1.1130, as the US Dollar gained strength despite weaker data from the U-Mich index. Concurrently, GBP/USD fell to 1.3250, influenced by an uptick in US consumer inflation expectations.

Gold prices fell below the $3,200 mark, reversing gains from a prior rally. This decline resulted from a stronger US Dollar and reduced geopolitical tensions, putting gold on track for the largest weekly loss this year.

Ethereum continued its recovery over $2,500, benefiting from the Pectra upgrade’s positive market reception. This development led to an increase in EIP-7702 authorizations, reflecting healthy adoption by wallets and decentralised applications.

Former President Trump’s Middle East visit in May 2025 resulted in several trade agreements aimed at enhancing US trade relationships. These deals were focused on correcting trade imbalances and bolstering America’s technological and defence exports.

In foreign exchange trading, the use of leverage entails a high risk due to the potential for substantial losses. Traders must assess their experience and risk tolerance carefully before engaging in such trades.

Knock On Effects of Price Index Rise

The unexpectedly high 2.1% rise in New Zealand’s Producer Price Index for the first quarter has created some immediate knock-on effects across macro trading strategies. Forecasts had pointed to a flat 0.1% increase, so the actual data release came as a jolt. Costs are clearly rising more aggressively than traders had priced in. These outcomes tend to push interest rate expectations higher, prompting market participants to consider upward revisions to local bond yields. Naturally, this also leads to recalculated interest rate differentials, something we must keep close eyes on — especially when setting up medium-term cross-rate exposures.

Over in currency markets, EUR/USD slid lower, falling to a weekly trough of around 1.1130. This came even as U.S. consumer sentiment readings were disappointing. The reaction was more about underlying dollar strength fed by increased inflation expectations in the U.S., rather than microeconomic data points that are often shrugged off unless particularly extreme. Euros took the brunt of the adjustment, but it wasn’t alone. Sterling also retreated, with GBP/USD hitting lows around 1.3250. The decline reflected a combination of repositioning and the adjustment in implied rates prompted by the same higher U.S. inflation expectations. Inflation breakevens and short-end swap curves have steepened in tandem, particularly on the U.S. side, which gives dollar bulls more runway in the shorter cycles.

Gold’s drop beneath the $3,200 mark brings metals positioning back into focus. The earlier upward trend was largely driven by hedge demand amidst geopolitical flare-ups, which have since eased. That, together with recovery in the dollar and reduced appetite for safety flows, created a situation ripe for profit-taking in gold. The fact that it’s tracking for its largest weekly drop of the year suggests that some momentum strategies may have shifted back into net short territory, or at least gone flat. When both volatility compression and dollar strength occur simultaneously, metals become less appealing both as hedges and directional bets.

Meanwhile, Ethereum’s move through the $2,500 level has been underpinned by fundamental progress in network upgrades. The recent traction gained by EIP-7702 authorisations following the Pectra update points to both growing adoption and enthusiasm from developers. Unlike short-term sentiment-driven rallies, this price strength appears grounded in real uptake metrics — reflected by the increase in integrated wallets and decentralised applications. This type of development often supports a broader base for pricing models used in smart contract platforms. We continue to monitor gas fee structures and validator metrics for early warning signs of overextension.

Trump’s May 2025 Middle East visit, which resulted in several detailed trade agreements, brought a stream of positive commentary around greater U.S. technology exports and broader bilateral trade cooperation. Defence exports appear to have formed a key part of the discussions. From a geopolitical angle, such deals may bring supply chain changes that affect defence-linked manufacturers and select tech producers. These are difficult to price immediately but often show up in sector-based equity derivatives before making their way into broader valuation models.

As always, leveraged foreign exchange trading remains inherently risky, particularly in weeks like these, where data shocks and sharp repricing events cluster together. Risk should be weighed more cautiously during periods of dollar strength, especially when it’s driven not by growth but by shifts in inflation expectations. We advocate re-evaluating exposure levels, particularly on pairs facing asymmetric shocks, and recalibrating stop-loss positioning accordingly.

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The New Zealand services PMI, known as the BusinessNZ Performance of Services Index, registered 48.5 in April 2025. This marks a decline from March’s 49.1 and is below the survey’s long-term average of 53.0.

The sector is reportedly in mild decline, despite discussions about an economic recovery. New Zealand’s PSI has underperformed compared to other key trading partners.

Manufacturing Performance

In contrast, the New Zealand Manufacturing PMI for April demonstrated growth, rising to 53.9 from the previous 53.2.

While April’s Manufacturing PMI presents a rare bright patch at 53.9, services continue to falter — slumping to 48.5, which places the index distinctly below the expansionary threshold of 50. The fall from March’s 49.1 is subtle but persistent, reinforcing a broader pattern that’s been unfolding for several months now. With the long-term average sitting at 53.0, it’s evident that this isn’t just temporary or driven by one-off distortions. Rather, we are seeing a divergence — manufacturing is finding its footing, albeit modestly, while services are facing ongoing drag.

What does this suggest when we zoom out? The dissonance between the two sectors hints at underlying imbalances in economic momentum. In isolation, manufacturing holding above water might feel reassuring. But the bulk of modern economies—especially in countries like New Zealand—lean heavily on services. So, a contraction in that part of the economy, now stretching multiple months, brings clear consequences.

For traders focused on short-term volatility, the contrast becomes more than just academic. Markets often respond with sharper movements when data surprises come amid broader uncertainty. With headline services data falling deeper into contraction territory, broader interpretations around interest rate expectations, forward-looking business confidence, and employment prospects all begin to shift. That’s where the opportunity, and the risk, start to expand.

Sector Divergence

Keller, the BusinessNZ executive, had previously suggested that recent optimism in the business sector might be premature. Looking at these numbers, we see support for that view – one that underlines why positioning based on recovery narratives might come under pressure in the near term. Confidence surveys had begun reflecting some mild positivity earlier in the quarter, but that sentiment hasn’t translated into PMI growth yet.

On the flip side, Bagrie, the economist, continues to underline that services, particularly across tourism, hospitality, and retail, are grappling with shifting demand and cost structures, which are slowing their recovery. Recent input from domestic surveys suggests that operating costs remain sticky, with real wage pressures still filtering through. This limits rebound speed and creates defensiveness across service-related equities and currency pairs tied to consumption.

From our side, we’re considering whether to scale back positioning that leans heavily into cyclical strength assumptions for now. Instead, attention may be better served in watching spreads between sectors and looking for pairs trades that capture this divergence. For instance, long exposure to industrial names hedged against domestic retail-focused listings could present a cleaner way to manage exposure. In FX terms, there’s the potential for NZD movement to reflect these splits, particularly against currencies where services are either stabilising or expanding.

It’s also worth noting the timing within the monetary cycle. Central bank commentary has recently grown more cautious, even as inflation prints inch down month-on-month. That cautiousness likely stems from this underperformance in services, which ties directly into domestic demand – a key metric central bankers monitor when finalising rate pathways. This slows the case for earlier rate cuts.

Expect this data to feature in upcoming bank commentary and broader market reactions, especially as traders start to prepare positions ahead of forward guidance releases. Short-term positioning now sits delicately between optimism tied to manufacturing signals and concern around a more lethargic consumer and service economy.

For our trading desk, the focus shifts from broader market direction to dissecting the mismatches. That’s where alpha may sit in the current environment.

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In the first quarter, New Zealand’s Producer Price Index (Input) rose by 2.9% quarter over quarter. This figure surpasses the anticipated increase of 0.2%.

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The unexpected jump of 2.9% in New Zealand’s Producer Price Index (Input) for Q1, well above the modest 0.2% forecast, offers deeper information about upstream pressures building in the economy. The measure tracks the cost firms face when purchasing goods and services to produce their own offerings, and such a steep quarterly change points to an intensifying squeeze on producers from rising input costs.

This isn’t just a quirk in the data. It’s a change that could ripple through pricing structures. If producers are absorbing more expensive inputs, that cost may eventually find its way through to consumer prices, depending on margin pressures and competitive dynamics. The pass-through depends on each sector’s pricing power and broader demand conditions, but the scale of the rise suggests companies may struggle to keep those extra costs off their customers’ bills indefinitely.

Implications For Rate Expectations

We need to keep a close watch on how this affects rate expectations going forward. When producer costs gain this much ground, it can alter central bank thinking, particularly if there’s a concern it could sustain elevated inflation. This becomes even more relevant when considering the Reserve Bank of New Zealand’s existing concerns about price stability. That doesn’t mean policy will be tightened immediately; however, it does suggest a reduced appetite for any near-term loosening.

Market participants will now likely reassess inflation-linked assets and short-term rate futures. If producer inflation stays hot, hedging dynamics could shift as well – possibly pushing volatility higher within options pricing related to interest rate products.

We’re seeing this number as a signal of momentum continuing to build where it’s least helpful – at the cost base of the economy. For those monitoring price structures and the repricing of risk along the curve, it’s time to rework models and assumptions tethered to a more subdued inflation environment.

Traders should be cautious of treating this as a standalone data outlier. Instead, it’s best viewed in the context of broader cost and supply trends that have been showing renewed upward pressure. Stay aware of conditions in commodity input markets and supply chain metrics, as both will offer more short-term visibility into whether this is a one-off surge or an early step in a new trend.

We’ll also be focusing on forward-looking expectations embedded in swap rates and term structures as they adjust to this new producer input reality. There is a difference between temporary price bumps and sticky increases, and this is where accurately gauging future moves becomes more complicated.

None of this negates the groundwork that must be done before any trade decisions. Risk boundaries and scenario planning help navigate market turns without being caught by sharp pivots. With producer prices raising the floor of what costs might look like in the near term, the pricing of corporate margins and cost-of-capital assumptions should be given a fresh look.

So, while headlines might point to inflation in a general sense, it’s in these upstream details that the early messages surface. We’ll be watching closely.

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