Global Market Summary
Entering the last week of May 2025, the global financial market continues to show high volatility triggered by a number of fundamental sentiments, including:
- Fiscal uncertainty in the United States,
- Geopolitical tensions between major economic countries,
- Developments in the direction of monetary policy from major central banks,
- And short-term inflation expectations.
The impact of the combination of these factors has created uneven pressure on various major world currencies, and strengthened the appeal of safe haven instruments such as gold and the Swiss franc.
1. United States – US Dollar (USD)
The US dollar has been trading under pressure for the past few days, as market perceptions of the country's fiscal prospects have worsened. According to a report from Moody's Investors Service, market concerns about the sustainability of the US budget and the potential for an increase in the medium-term deficit have put pressure on the greenback.
On the other hand, the US President is still postponing the implementation of additional import tariffs on the European Union until July 2025. This delay provides a break for the market, but still leaves uncertainty that limits the strengthening of the dollar.
Meanwhile, market players are awaiting the release of Core PCE (Personal Consumption Expenditures) data on Friday as a leading indicator of inflation, which could provide further clues on the direction of the Federal Reserve's monetary policy. Expectations are still divided between continuing the hawkish stance or transitioning to a more dovish policy in the second half of 2025.
2. European Union – Euro (EUR)
The euro strengthened against the US dollar, largely driven by a weaker dollar and improving trade sentiment between the US and the European Union. The US President's extension of the tariff discussion has given the euro positive sentiment in the short term.
However, European fundamental data has not shown a solid recovery. The latest PMI data release showed that manufacturing activity is still in contraction territory in several major countries such as Germany and France. This makes the euro's strengthening still technical and speculative, rather than based on solid fundamentals.
3. United Kingdom – Pound Sterling (GBP)
The pound is moving in a bullish trend, supported by stable UK employment data and expectations that the Bank of England (BoE) will maintain a relatively tight monetary policy in the near future.
However, the risk of a correction remains open if this week's inflation and domestic consumption data show weakness, or if the US dollar strengthens again ahead of the PCE data release.
4. Switzerland – Swiss Franc (CHF)
Demand for safe haven assets has increased, especially due to concerns about geopolitical tensions in the Middle East and increasing speculation about disruptions to the global supply chain.
The Swiss Central Bank (SNB) has so far maintained a fairly stable monetary policy, and the CHF is expected to remain in demand if global uncertainty continues.
5. Japan – Japanese Yen (JPY)
The Japanese yen strengthened to its highest level this month against the US dollar. The statement from the Japanese Prime Minister regarding progress in trade talks with the US created positive sentiment, although domestic data such as inflation and consumption still showed weakness.
The Bank of Japan (BoJ) remains the only major central bank holding ultra-low interest rates, but market pressures may force it to consider policy normalization in the second half of the year.
Key Economic Events This Week (May 26–30, 2025):
- Wednesday (May 28) RBNZ interest rate decision (New Zealand)
- Thursday (May 29) FOMC minutes release Fed policy direction
- Friday (May 30) US Core PCE (inflation)
