The People’s Bank of China (PBOC) serves as China’s central bank and sets the daily midpoint for the yuan, also known as renminbi (RMB). The PBOC uses a managed floating exchange rate system that permits the yuan’s value to fluctuate within a certain band around a central reference rate or “midpoint,” currently at +/- 2%.

The previous close for the yuan was 7.2090. The PBOC has injected 64.5 billion yuan through 7-day reverse repos at an interest rate of 1.40%. Today, 158.6 billion yuan worth of reverse repos mature, resulting in a net drain of 94.1 billion yuan.

China’s Monetary Adjustments

This article outlines how China’s central monetary authority—specifically through reverse repo operations and its influence over the yuan—has recently adjusted short-term liquidity. The midpoint mechanism provides a reference point from which the yuan can move within a defined percentage either side, helping to rein in erratic movement while still allowing some day-to-day market flexibility. The People’s Bank set the midpoint and then allowed the market to trade within a narrow corridor around it.

Looking at this morning’s figures, there’s a notable imbalance between the amount reinjected and what’s maturing. While they added 64.5 billion via 7-day reverse repos, maturities tallied over 158 billion, thereby pulling a net 94.1 billion from the system. The shift tells us the central bank’s immediate intent is not to flood the markets with additional cash. In fact, if funding needs were truly pressing, more aggressive liquidity measures would likely have already appeared.

A tighter liquidity stance—mild as it may seem—offers a message: there’s a preference at the moment to manage local rates upward, or at least prevent them from slipping too far. Given the mixture of macroeconomic data coming from China as of late, it’s reasonable that the central bank holds off from overt easing for now.

For those of us following volatility, rate differentials remain key. The PBOC keeping the 7-day reverse repo rate steady at 1.40% for now signals they aren’t yet prepared to pivot toward cheaper funding. The consistency reinforces that they are letting precaution guide moves, rather than any eagerness to trigger broader reflation.

Reverse repo operations are a tool—they give or drain cash from commercial banks to control interbank liquidity on a very short-term basis. When the net is negative, as it is here, it’s a hint that authorities would rather temper potential over-participation using borrowed liquidity, rather than accelerate short-term leverage.

Liquidity Operations At Month End

Now, noting the previous yuan close at 7.2090, there’s a potential for stability combined with a light touch of interventionism. It shows a mood somewhat resistant to letting depreciation fears spiral, but not aggressive enough (yet) to signal a coordinated effort to boost the currency. If we’re tracking implied volatilities and delta positioning, this mild net-drain scenario could result in narrower realised ranges for the yuan unless outside forces interrupt.

Of course, such adjustments are not happening in isolation. There’s timing involved here, falling at month-end when liquidity typically shifts due to settlement demand and bank reserve requirements. Withholding some cash supply now may make sense from a short-term perspective, especially with cross-border capital movement still playing a role in shaping expectations.

The market could interpret the net liquidity drain as aligning with the bank’s broader target of financial discipline. It’s not as if we’re being told growth doesn’t matter, but rather that constraints still carry weight in the current phase—they seem only willing to lean marginally on stimulus tools.

Watching how this balance interacts with US yields and the resulting currency spread will continue to matter. Spreads tightened slightly last week, and with the yuan treaded into firmer territory recently, playing off shifts in midpoint settings becomes quite relevant. Adjustment in repurchase operations informs us of forward momentum—both for positioning and short-term premium pricing. We’ll need to continue charting these flows closely, especially where derivative vol curves react to this push-pull.

It is best to revisit skew charts with these flows in mind and raise sensitivity settings around yuan-forward implied volatility. Staying nimble around hedging structures may help, especially as reverse repo sizes can hint at near-term short-end bias. It’s not always about policy announcements; sometimes liquidity operations carry a louder message.

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The United Kingdom’s Gross Domestic Product (GDP) for the first quarter of 2025 exceeded forecasts. The GDP increased by 0.7% quarter-on-quarter, above the expected growth of 0.6%.

The GBP/USD was trading below 1.3300 despite the positive UK GDP data. The pair was supported by a weaker US Dollar amid uncertainties surrounding US trade policies and Fed announcements.

Gold Market Trends

In the gold market, prices continued to decline, reaching a low of $3,135. This decrease was influenced by easing trade tensions between the US and China and reduced expectations for future interest rate cuts by the US Federal Reserve.

In the cryptocurrency market, Shiba Inu experienced a rally despite a previous correction. The increase followed market speculation over a Chinese company’s interest in acquiring $300 million worth of the digital currency.

International trade dynamics between the US and China experienced a positive shift. This was marked by a pause in their trade war, offering the hope that the most challenging market conditions might improve.

That the UK economy grew more than forecast in Q1 2025 gives us a measure of relief, and perhaps a little surprise. A 0.7% quarter-on-quarter rise isn’t staggering, but it’s enough to suggest household spending and industrial output held up better than expected through the winter. Most investors had priced in only 0.6%, giving traders reason to reassess the strength of domestic demand. The beat adds weight to the idea that the Bank of England might show less urgency to loosen monetary policy, at least in the immediate term.

Exchange Rate Observations

Still, sterling didn’t exactly leap higher. The GBP/USD exchange rate remained under 1.3300 even after the GDP release. So what kept the pound subdued? The bigger driver was the US side of the equation — namely, a broadly weaker dollar, which has been on the back foot amid recent hesitancy from the Federal Reserve. Unclear messaging from Powell and company around the timing of any pivot has left dollar bulls without a strong narrative. Meanwhile, the direction of American trade policy under current circumstances has only added to that indecision, dulling appetite for dollar exposure.

At the same time, traders watching gold will have noticed that the shine continues to fade. With bullion down to $3,135, the price action isn’t hard to analyse. Suppose cooler relations between the US and China have rather quickly dampened demand for safe-haven assets. On top of that, expectations are shifting — the Fed is no longer viewed as being in a rush to cut rates, which tends to reduce downward yield pressure and, in turn, makes gold less appealing. As real yields rise, the logic tilts further against holding non-yielding assets like bullion.

The cryptocurrency corner had its own drama. Shiba Inu, which recently came down sharply, staged a recovery. The rebound came not from technicals but on speculation — word spread that a Chinese firm was preparing to purchase a large block of tokens, roughly $300 million worth. We can’t verify every number behind this rumour, but the impact on sentiment was fast and broad. Traders with open exposure in the altcoin universe were left to decide whether to front-run or wait out the volatility. For now, leverage appears to be creeping back into those trades, with implied volatilities climbing across multiple chains.

Global trade, meanwhile, showed faint signs of tilting back towards stability. A notable pause in friction between the US and China triggered mild optimism in risk assets last week. If the two sides manage to keep negotiations from unravelling over the next several weeks, that mild optimism could extend into more aggressive positioning in equity and commodity-linked derivatives. For now, soft indicators suggest some hedge unwinds are underway, though no one seems in a hurry to bet everything on the recovery scenario just yet.

We have observed that positioning across several derivative markets remains relatively cautious, even with the better-than-expected economic signals from the UK and the easing bias in global trade. The key here is not jumping ahead of the data. Event risks, such as central bank minutes and upcoming inflation prints, still carry weight and may cause traders to move in or out proportionally. Forward-looking implied volatility suggests that participants are looking for more clarity before rebalancing seriously.

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UBS forecasts potential growth for technology stocks after their recent recovery, despite existing uncertainties in U.S. trade policy. The firm’s analysts suggest maintaining positions in quality AI firms worldwide.

There are noted risks that could affect this outlook. The longevity of the 90-day trade truce is uncertain, and potential semiconductor tariffs might impact the sector. Furthermore, costs for tech companies could rise due to supply chain relocations.

Intricacies of Trade and Tech

The influence of anticipated changes to AI diffusion rules from the Trump administration also remains to be seen. These factors may play a role in shaping the future of the technology sector.

Analysts at UBS have put forward a forward-leaning case for technology shares, highlighting their recent rebound as a foundation for further gains. They emphasise retaining exposure to established AI firms, especially those with robust profitability and proven research capabilities, not just in North America, but globally.

To unpack this, the prior paragraphs point to a few clear threads. UBS sees room for growth in tech shares – this is rooted in the ongoing recovery exhibited by these firms. However, they’re not ignoring the fact that the backdrop remains unsettled. A temporary agreement between the U.S. and China has paused further tariffs for now, but that peace carries an expiry date. Ninety days, in trade talks, is as fleeting as it sounds. That clock is ticking.

Beyond that, there’s unease about whether new charges on semiconductors could be introduced. Should this come to pass, it could directly eat into profits and indirectly affect longer-term investment decisions in the sector. Of particular note is the threat of redirected supply chains. Having to rebuild networks of suppliers, especially when hardware and component expertise remain concentrated through specific markets, introduces added operational cost and complexity.

A further headwind, and not a minor one, lies in the regulatory domain. Policymakers in Washington are considering adjustments on technologies underpinning AI, possibly to restrict their use or slow their international reach. While nothing has passed yet, it’s a variable that can’t be ignored, especially when most high-growth firms rely on integrated cross-border collaboration.

Taken together, what we are seeing is a case where optimism should be selective. The emphasis from the bank is on “quality” – that is, those institutions with strong balance sheets, defensible margins, and a track record of navigating geopolitical friction without buckling. The margin for error is narrowing.

Tactical Opportunities in Volatile Markets

For those of us active in derivatives, especially where short-term implied volatility may appear skewed due to these tensions, this points to a tactical opportunity. There’s more movement now across equity-linked instruments than we’d typically expect midway through a quarter. Smart structuring around bullish but hedged positions might offer some level of protection, should tariffs bite harder or the policy changes materialise faster than expected.

We should also pay attention to where open interest is building, particularly around AI-linked indexes and ETFs. Shifting flows in these instruments often give us a clearer signal ahead of broader moves in the underlying.

Timing and precision are both vital here. As positioning becomes crowded, even accurately predicted moves can fail to pay unless strategies are set up with entries and exits defined carefully. The next two to three weeks could offer range-bound behaviour punctuated by sharp responses – not just from market data but headline risk from the policy front. We need to be prepared to react to tariff news and regulatory leaks with speed and discipline.

While the position held by UBS analysts strengthens the case for select plays in long positions, the real advantage may lie in tactical trades that adapt to push-pull forces from all sides. With implied volatility levels already reacting to political rhetoric, we can’t underestimate how fast these shifts will feed through to skew pricing and correlation spreads, especially as machines react faster than headlines can finish printing.

In short, it’s calm on the surface, but the flow beneath is anything but quiet.

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Gold prices are under pressure, dropping to $3,135, the lowest since April 10. This is influenced by US-China trade optimism and rising US bond yields, reducing the demand for safe-haven assets like gold. The truce between the US and China for 90 days decreases recession concerns, affecting expectations for Federal Reserve policy adjustments and enhancing Treasury bond yields.

Despite positive factors, US Dollar bulls are cautious, awaiting the US PPI data and Fed Chair Jerome Powell’s speech. The release of this data could impact the USD and provide momentum to the gold market, but current geopolitical risks provide limited support for gold. Technical analysis shows a recent fall below the 61.8% Fibonacci level, indicating further potential drops to the $3,100 support zone. Resistance lies at $3,168-3,170, with recovery facing challenges up to around $3,230.

Federal Reserve Monetary Policy

The Federal Reserve’s monetary policy affects interest rates and the USD, through measures like Quantitative Easing (QE) and Quantitative Tightening (QT). QE involves buying bonds to increase circulation, often weakening the USD, while QT does the opposite, usually strengthening it. The Fed holds eight policy meetings annually to decide on monetary strategies.

Gold’s recent slide, falling beneath $3,135 and teetering towards the $3,100 mark, reflects a shift in mood driven by overseas tailwinds rather than domestic cracks. A temporary easing in trade tensions between China and the United States has eased recession fears, trimming demand for traditional hedges like bullion. Naturally, with less fear pulsing through the system, investors are sliding back into riskier assets and pulling away from metals, which has dragged prices downwards.

One should keep in mind that this move isn’t rooted in heavy selling or panic—it’s more a natural consequence of strengthening US Treasury yields. Bond yields typically rise when economic optimism returns, and in turn, they often draw funds away from non-yielding assets. In this case, gold seems to be caught in that rotation. This is further exacerbated by the dynamics around the greenback.

Though the dollar has shown bouts of resilience, bullish momentum remains somewhat restrained ahead of upcoming inflationary data and commentary from the Federal Reserve’s leadership. What we’re looking at is a market that’s wary of overcommitting before more clarity emerges. Current geopolitical tensions aren’t vanishing overnight, but they’re not loud enough to support a meaningful rebound in gold yet.

Economic Indicators and Gold

From a technical standpoint, the recent dip through the 61.8% Fibonacci level offers a fairly clear signal. Historically, such a breach hints at additional downside, and with the next support sitting just shy of $3,100, that marker could be tested if sentiment doesn’t shift. Resistance on the way back up isn’t soft either. Any attempt at recovery would first need to face the $3,168–$3,170 zone, an area where buyers have already struggled to take control in previous sessions. Past that, $3,230 stands as a tougher ceiling.

We’re also factoring in the broader macro picture. Expectations for the central bank’s moves over the coming months remain tightly linked to economic indicators, especially inflation-related data. As such, the Producer Price Index print and Powell’s upcoming remarks could tilt risk sentiment quite abruptly. Strong data could reinforce the case for tighter conditions, in which case bond yields might spike again, leaving gold vulnerable.

Monetary policy remains the primary lever here—especially in the form of asset purchases or reductions in the central bank’s balance sheet. When the Fed engages in quantitative easing, for example, it typically floods the system with liquidity, which weakens the dollar and can buoy commodities. Conversely, tightening removes that liquidity, often bolstering the dollar and pressuring gold.

There’s little doubt: the market remains data-sensitive. Short-term positioning should be nimble, tied closely not only to price levels but to macro signals that might push yields higher or lower. Patience may be required at this juncture, but a reactive rather than predictive stance could offer better risk-adjusted entries as volatility rises into key economic releases.

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Federal Reserve Bank of San Francisco President Mary Daly stated that offering policy guidance is inadvisable due to elevated uncertainty. Despite the uncertainty, businesses are cautious but not stagnating.

The high level of market uncertainty prompts central banks to reassess their strategies. This uncertainty surpasses typical levels, though developments like eased US-China tariffs may reduce some anxiety.

Impact Of Uncertainty On Central Banks

Uncertainty impacts central banks, businesses, and households extensively. When uncertainty is too high to provide forward guidance, potential responses include considering a rate cut or engaging in dovish discussions to ease conditions for businesses and consumers.

Daly’s remarks suggest that forecasting central bank policy beyond the very near term may be unstable right now, largely because the usual indicators that inform those decisions are not pointing in a consistent direction. Businesses, while not retreating altogether, are clearly holding back on bold moves. They’re not frozen, but they’re decidedly hesitant—waiting to see how matters unfold.

The kind of uncertainty we are dealing with goes beyond simple economic cycles or the usual sets of data fluctuation. It stretches across sectors and decision-making bodies. There is pressure here, not necessarily from a singular event, but from an accumulation of variables that resist resolution. For example, any easing in the trade tariffs between major economic powers is welcome, but it arrives as a single ray in wider clouded skies.

From our perspective, we interpret this pullback in forward guidance as a warning. It doesn’t speak to chaos, but it does imply fragility. When communication becomes more restrained, it usually correlates with a desire to avoid firm commitments. That alone hints towards the directional uncertainty of upcoming moves.

In bond and rate markets, that hesitancy translates to inconsistent pricing. Yield curves, normally orderly, begin showing divergence that doesn’t resolve across maturities. When we see central banks opting against offering concrete projections, it’s often due to a perceived imbalance between the cost of being wrong and the benefit of appearing steady. Hence, we watch how decision-makers shift – not in grand statements, but through smaller signs like emphasis on “data dependence” or sudden concern over real-time indicators.

Market Reactions And Implications

Powell, likely to be more cautious himself following Daly’s tone, has fewer reasons to accelerate tightening, unless inflation metrics flare again. Labour market data needs to be watched not just for monthly totals, but also for details—revisions, participation, and wage conditions. Misses or overreactions by the Fed, in either direction, carry weight.

On our desks, that implies careful calibration. Implied volatility won’t be low – not in this climate. Skew has returned to short-dated structures. We’re pricing more localised reactions instead of larger trend trades. That is appropriate. Where guidance falls quiet, risk must be priced actively.

We find that when Fed uncertainty rises, correlation between macro products tends to weaken. That isn’t permanent, but in moments such as this—a potential inflection—it forces positioning to become more surgical. There’s less room for blanket exposure across related markets, and more need to define the specific event path you’re trading.

For now, narrative risk is high again. Not every scheduled speech will hold weight, but the potential for tone shifts remains elevated. We’ve seen this before. The lack of forward direction doesn’t mean no direction; it means market participants must interpret intent from subtler moves. That requires more attention to liquidity, to interbank pricing, to auction results. Minor things that used to seem routine may now tell you more than the headline numbers.

Be wary of assuming a pause equals a peak. The absence of guidance may lead some to interpret that the terminal rate has already arrived. But with wider economic readings bouncing inconsistently, that is not an argument we’re prepared to back broadly. Instead, we lean on shorter maturities and dynamic delta management, and we avoid assuming mean reversion where the inputs are still unresolved.

As rate path clarity continues drifting, the premium on optionality—and on timing itself—will not reduce soon. The toolkit must shift accordingly.

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The Japanese Yen maintains its firm stance during the Asian session, leading the USD/JPY pair lower for a third day. Japan’s recent wholesale inflation report showed ongoing costs passed to consumers, adding to inflation concerns. Bank of Japan Deputy Governor’s comments about potential policy tightening further support the Yen.

Global risk sentiment appears slightly weaker, bolstering the Yen’s safe-haven appeal. In contrast, the US Dollar sees limited demand as traders await the US Producer Price Index and a speech from the Federal Reserve Chair. Optimism surrounding the US-China trade situation might limit the Yen’s gains, and reduced expectations of aggressive Fed policy changes could curb USD losses.

Japan’s Economic Indicators

Japan’s recent data indicates sustained price pressures, supporting arguments for more policy adjustment by the Bank of Japan. Traders show caution ahead of the US economic news. A recent softer US inflation report affirms expectations for further Fed rate cuts, while ongoing trade optimism tempers recession concerns.

Technically, USD/JPY faces resistance and risks further decline towards the 146.00 mark. A break below this level could signal deeper losses. Conversely, pushing past resistance could lead to upward movement towards 148.00. Market heat maps show USD’s relative strength and weakness against various currencies.

So far, the Japanese Yen appears to be drawing support from both domestic and external factors. The recent wholesale inflation figures, released from Japan, show that companies are continuing to transfer higher costs along the supply chain, filtering through to consumer prices. This isn’t just a blip—there’s a clear signal here. A consistent push in prices like this often lays the groundwork for shifts in central bank thinking. And with Deputy Governor Uchida hinting that policy adjustments could be on the table sooner rather than later, the Yen has some additional fuel behind its latest advance.

While that happens, there’s been a general air of caution across broader markets. Unease globally, especially in the face of potential headwinds, makes the Yen more attractive, as it’s often turned to when certainty is scarce. The Dollar, by contrast, shows little energy at the moment. There’s a sense of waiting, with everyone eyeing the upcoming US Producer Price Index figures and trying to read between the lines of Powell’s next remarks.

Global Market Sentiment

Expectations for rate cuts in the US have been reinforced by a recent inflation read that came in a touch softer than anticipated. This tends to make the Dollar less appealing, as rate cuts often reduce the yield that investors earn on US assets. Not helping matters is the persistent uncertainty over how far and how quickly the Federal Reserve will actually move. Optimism that US-China trade lines are settling somewhat has kept recession fears in check, though it also reduces urgency for aggressive monetary support.

From a tactical lens, the chart tells its own story. The USD/JPY is approaching a key level around 146.00. If this level fails to hold, it could open the door to renewed selling pressure, likely pushing through support barriers and drawing in short positions. Targets below are clear, and traders are beginning to map out potential zones where momentum might pick up pace. But there’s also another scenario to consider—if the pair finds buyers and momentum shifts upward, it may break through resistance near 148.00. Should that occur, it risks triggering another wave of Dollar strength, at least temporarily.

We’ve been watching broader currency flows, and the heat maps are beginning to reinforce this trend—Dollar strength isn’t uniform anymore. It’s ebbing here and there, vulnerable to real-time data and sentiment shifts. Watching correlation patterns helps: even subtle divergences between risk assets and safe-haven responses can suggest where flows are headed next.

As we head further into the month, positioning will likely become more sensitive to central bank commentary and macro reports. Anyone operating in short-term derivatives, particularly those with directional exposure to USD/JPY, will need to keep a close eye on volatility bands. Option premiums have edged higher, which reflects rising uncertainty. That alone tells you there’s anticipation building—perhaps not for a large immediate break, but for sharp directional movement once clarity emerges.

From our standpoint, any strategies involving USD/JPY should now begin to factor in the potential for more frequent ranges being tested. Waiting passively may not be the best approach, particularly when forward guidance from Japan could pivot suddenly. Flexibility in entry levels, coupled with disciplined risk management, should remain central to any deployment over the next few sessions. We’ve seen this pattern before: a calm front tapering into wider swings, often tied to macro headlines or unscheduled official comments.

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Federal Reserve Bank of San Francisco President Mary Daly stated that the monetary policy is well-positioned and moderately restrictive. She conveyed this message during a fireside chat at the California Bankers Association 25th Annual Conference and Directors Forum.

She noted that businesses exhibit caution amid uncertainties but are not stalling. Daly expressed that solid growth, a strong labour market, and decreasing inflation are desired outcomes.

Adaptability Of Fed Policy

She assured that the Federal Reserve’s policy is adaptable to economic developments. Patience is emphasised as a key approach in the current economic landscape.

Daly also mentioned that loan demand remains robust, and credit quality is maintaining good standards. These factors play a role in the ongoing economic assessment.

To understand the remarks made by Daly, it’s important to unpack the message being conveyed here. At its core, what she’s suggesting is that interest rates are currently set at a level designed to cool inflation without shutting down economic activity. By describing policy as “moderately restrictive,” she means that borrowing costs are high enough to ease supply-demand imbalances but not so high as to completely choke off credit or investment flows. It’s a balancing act, and one requiring more observation than intervention for the time being.

Her tone isn’t one signalling any immediate change—there’s no sense of urgency to pivot policy or rush into further adjustments. Instead, there’s a strong lean towards staying the course, watching data closely, and reacting only if things shift beyond what’s expected. Economic growth is still ticking along, people are largely able to find employment, and inflation, while not yet at target, is easing from previous highs. These are all symptoms of a system that’s responding, even if slowly, to prior policy moves.

The fact that firms remain active, even in uncertain conditions, means there’s still resilience lurking beneath the headlines. And from what we gather, borrowing appetite remains intact and the quality of that credit isn’t deteriorating. That’s encouraging, especially when gauging how well markets and households are adjusting to higher rates.

Market Consistency And Reaction

From our vantage point, the key message is about consistency. Shifts in expectations need not be abrupt, especially in derivatives trading, where shallow misreadings of tone can produce unnecessarily large reactions. Daly isn’t jawboning the market into repositioning; this isn’t a call to front-run policy change. It’s actually the opposite—stay patient, stay reactive, not predictive.

Adjustments in implied volatility may already reflect this stabilised tone. What we’ve seen lately is a plateau in short-term rate expectations, which ought to reduce directional pressure on rate-sensitive contracts. That said, opportunities persist. Gradual change doesn’t mean inaction; it means precision matters more than ever.

In times like this, we anchor our view to data—not headlines, not sentiment. Rates look like they’re in a holding pattern, and the onus now is on inflation trends and credit indicators. If credit standards start slipping or loan performance worsens, that’s another discussion. But for now, yields and curves may drift, not lurch.

Further, in Dealer positioning and client flows, we note continued appetite for protection on both sides—steepeners and flatteners aren’t leaning too heavily one way or another, which reflects the same balance Daly outlined.

We watch for inflection points, yes, but we don’t position for them every time someone speaks. What matters more here is that the policy regime appears to favour methodical moves, not sudden course corrections.

What’s implied is a backdrop where shorter-dated vol may remain compressed unless jolted by an external catalyst. Open interest movements suggest that across the front end, traders are keeping exposures minimal, and rightly so.

This message from Daly reinforces that. We’re not in an ‘act now’ environment. We’re in a ‘watch carefully, trim where necessary’ mode. That kind of setting rewards selective bets, not sweeping ones.

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EUR/USD maintains its position around 1.1200 in the Asian session, as the Euro gains momentum before the Eurozone GDP report for Q1 2025. The Euro benefits from increased confidence in its status as a reserve currency.

US policies are seen to diminish the US Dollar’s appeal as a safe haven. Germany’s increased public spending further boosts demand for the Euro. Despite European Central Bank talks of rate cuts, the Euro remains resilient due to a softer US Dollar.

Focus Shifts To Economic Indicators

Attention shifts to US data releases like Retail Sales and the Producer Price Index. Discussions arise that a weaker Dollar could enhance US trade competitiveness.

The Eurozone GDP, a critical economic indicator, measures the total value of goods and services produced in the Eurozone. A rise in GDP is generally positive for the Euro, with the upcoming consensus and previous reading both at 1.2%. The GDP release is scheduled for May 15, 2025.

With the Euro stabilising near the 1.1200 mark during the quieter Asian hours, there’s a sense that recent undercurrents in the macroeconomic backdrop are beginning to ripple across currency markets. A stronger Euro, supported by broader acceptance as a reserve instrument, finds added support from domestic developments such as increased fiscal expenditure out of Berlin. This increase in public investment, while mostly long-term in nature, sends indirect but sustained confidence signals in the near term, especially in light of ongoing discussions surrounding monetary easing within the bloc.

In contrast, the Dollar finds itself under quiet pressure. Recent fiscal moves in Washington and a slightly more dovish stance from the Federal Reserve have reduced its draw as a defensive holding. This subtle repositioning by global investors is compounded by renewed interest in Euro-denominated assets, particularly as economic releases across the Atlantic carry room for upside surprises.

Upcoming US Economic Data

On the calendar, our attention now moves towards two key upcoming figures from across the pond—particularly Retail Sales and the Producer Price Index (PPI). Any deviations in these readings will likely influence short-dated rate expectations, and consequently the interest rate differentials that often drive short-term flows into currency derivatives. A subdued PPI print, for example, may encourage bets on softer monetary conduct, reducing real yield expectations and further weighing on the Greenback.

While monetary policy remains a talking point, it’s the upcoming Eurostat GDP print that could provide more directional bias. The measure encapsulates economic output across the Eurozone. With consensus aligning at an annual pace of 1.2%, in line with the previous quarter’s outcome, there’s a level of anticipation for whether this print will either confirm a pattern of moderate expansion or surprise to the upside. The scheduled date of 15 May places this event in a relatively light macro window, amplifying its potential reaction across currency pairs.

In this environment, attention needs to turn less towards the broad trend narratives and more towards the timing of these smaller moments which may temporarily but aggressively shift positioning. As derivative traders, the focus sharpens on relative performance rather than absolute changes, and on how implied volatility prices into the front end of the curve in advance of this economic data.

When influencers such as Weidmann signal approval of expansionary policy in the Euro area, we often observe a sustained interest in building longs on currency strength—even when rate cut talk is already priced in. This stems from the belief that coordinated fiscal and monetary shifts offer a broader policy cushion, adding structural support to the single currency.

Our approach in the weeks ahead should be to closely track three key threads: the rate of USD yield repricing, surprise potential in US activity data, and the directionality of Eurozone economic performance. The skew in short-dated options may begin to reflect higher demand for upside Euro protection, particularly if GDP edges beyond consensus.

Volatility remains suppressed relative to historical ranges, but that can shift quickly, especially around tightly packed economic releases. The presence of consistent demand for the Euro—even amid easing discussions—suggests there’s a firmer floor underneath current pricing than surface-level Fed-ECB divergence might imply. We may be seeing a transition phase, where rates decouple slightly from FX direction, and flows are driven more by relative growth expectations and fiscal injection than purely by base rates.

It’s worth noting that the 1.1200 level has not so much acted as resistance but more a magnet. Each return towards it feels less like rejection, and more like a reassessment point. Movement above or below needs to be contextualised against both the data and implied market responses.

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Raising the Bar in 2025: VT Markets Delivers Its Strongest Trading Month Yet

Record-breaking performance at highlights VT Markets’ momentum in its 10th anniversary year

15 May 2025, Sydney, Australia – VT Markets, a leading global multi-asset broker, has recorded its strongest-ever monthly trading volume, reaching 720BN in April 2025. This milestone reflects the VT Market’s accelerated growth trajectory and influence across global financial markets. It also sets the tone for what promises to be a transformative year as VT Markets enters its 10th anniversary with renewed ambition and elevated client focus.

This trading record coincides with the unveiling of VT Markets’ 10th anniversary plans, officially announced on April 22, 2025. Marking a decade of rapid growth and global impact, the year-long celebration will feature exclusive promotions, offers, and engagement activities with our global community.

As volatility ripples across major asset classes, traders are actively seeking a platform that offers both speed and reliability. VT Markets has emerged as the broker of choice  — trusted for its ultra-fast execution, real-time analytics, and client-centric tools that empower users to act decisively in fast-moving markets. In a world where opportunity is measured in milliseconds, VT Markets continues to deliver the performance edge traders need.

VT Markets continues to see exponential growth across regions such as Southeast Asia, the Middle East, and Latin America, with 20% growth in daily active users. The platform’s multilingual support and culturally localized outreach strategies have deepened its relevance in emerging markets, while institutional volumes also surged thanks to deeper liquidity pools and ultra-low-latency trade execution.

“Sharing this milestone with our clients and partners is especially meaningful as it represents more than just numbers — it’s a reflection of the strength behind our platform, the innovation driving our growth, and the confidence the trading community continues to place in VT Markets,” said Ross Maxwell, Global Strategy Operations Lead. “We see it as both a celebration and a responsibility — to keep raising the bar in everything we do.”

As VT Markets advances its technological capabilities, infrastructure, and global client engagement, the company looks ahead to breaking new ground, and setting new standards in the world of online trading.

About VT Markets

VT Markets is a regulated multi-asset broker with a presence in over 160 countries as of today. It has earned numerous international accolades including Best Online Trading and Fastest Growing Broker. In line with its mission to make trading accessible to all, VT Markets offers comprehensive access to over 1,000 financial instruments and clients benefit from a seamless trading experience via its award-winning mobile application.

For more information, please visit the official VT Markets website or email us at info@vtmarkets.com. Alternatively, follow VT Markets on Facebook, Instagram, or LinkedIn.

For media enquiries and sponsorship opportunities, please email media@vtmarkets.com, or contact:

Dandelyn Koh 

Global Brand & PR Lead

dandelyn.koh@vtmarkets.com  

Brenda Wong 

Assistant Manager, Global PR & Communications

brenda.wong@vtmarkets.com

U.S. equities may continue their recent strong performance, aided by the easing of trade tensions between Washington and Beijing. According to Deutsche Bank, the S&P 500’s outperformance is expected to persist in the short term, as U.S. companies benefit more from the tariff reductions.

However, Deutsche Bank analysts caution against expecting a long-term rally. Tariffs, although currently reduced, are perceived to still impose a greater burden on U.S. companies compared to European ones. The trend of broader underperformance might continue until there is a substantial reduction in tariffs offering relief to affected companies.

Analyzing Us Stock Performance

This article from Deutsche Bank highlights that U.S. stocks have lately been doing well, partly because trade tensions with China have cooled off. With fewer barriers to selling goods across borders, American firms – especially those listed on the S&P 500 – are likely to see their profit margins improve, at least over the coming weeks. That’s the front-end picture.

But there’s a clear caution here. While trade restrictions have been dialled back, they haven’t disappeared. According to the same team, those remaining duties are still skewed in a way that makes U.S. businesses carry more of the load than their European counterparts. That pressure hasn’t gone away, and for now, it means the outperformance we’ve seen may not last much longer unless there’s a deeper rollback of these tax measures.

So what are we looking at going forward?

If we consider the past few trading cycles, price action has largely followed expectations outlined by the Deutsche team. The short-term advantage they detail – especially for sectors more directly tied to foreign sales – suggests we could see more investors continue rotating into names with heavy global exposure. But there’s a catch. When we factor in the medium-term weight of transactional costs and sourcing issues, it becomes clearer that traders will need to keep a close eye on both macro narratives and how companies are pricing in this relief ahead of actual earnings delivery.

Looking at Kelly’s point from the report, it also seems that a one-sided rally may hit resistance if global manufacturing doesn’t pick up pace. The message is not complicated – temporary conditions can prop up performance, but they’re not the same as structural shifts.

Market Strategy Considerations

We see that risk premiums are compressing too quickly in some sectors – notably consumer tech and industrial automation – which might make positions there more volatile than they appear. Hedging those exposures using short-dated index options or selecting defensive call spreads could still make sense over the next three to four weeks.

Furthermore, the report hints that European equities are faring differently. Though not under the same tariff load, the demand picture in the EU remains somewhat mixed. Muller mentions that unless major fiscal policy steps are announced soon by Brussels, there may not be enough of a catalyst to draw capital back into eurozone assets in the near term.

This wider divergence between American and European companies calls for more selective positioning. For us, that means revisiting how implied volatility skews are developing between exchanges. Spread trades involving regional indices may offer clearer opportunities now, but only where implied vols do not yet reflect upcoming policy deadlines or central bank data drops.

There’s been a temptation among some participants to lean back into risk-on strategies, especially with the S&P’s steady climb. What this research warns us about is that the backdrop hasn’t materially shifted enough to justify stretched multiples. It’s not the sentiment that’s unreliable, but rather the structural mechanics beneath it that have yet to offer firm support.

In short, we expect more directional interest in U.S. index futures, albeit on a more tactical basis. Positions will probably need faster rotation, with expiries kept tight. Given that, we’ll be watching margin ratios quite carefully and considering elevated gamma exposure whenever VIX levels dip below the 13 mark again, as that tends to precede more sudden pullbacks.

As traders, there’s space here to act decisively – not reactively – if the tariff themes resurface via upcoming WTO meetings or trade policy speeches from key White House officials. For now, the tactical tailwind remains in place, but unlike broader shifts in fundamentals, it comes with a fuse.

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