Collinson FX: May 5: Month of May opens on a positive note
by Collinson FX 5 May 06:16 BST
5 May 2025
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Collinson FX: May 5: Strong rally ends week of strong gains
Markets in the US rallied strongly to close out a week of strong gains, brushing off a shock headline US GDP number. US equities rallied into the close for the week, opening the month of May on a positive note. Non-Farm Payroll blasted past expectations, curing fears of a recession and a weak labour market. Confidence is beginning to grow on Wall Street and the furore over the Trump tariffs, is beginning to fade. The coming week is highlighted by interest rate decisions from the Bank of England and the Fed. The Bank of England is expected to resume interest rate cuts, but Powell is expected to hold rates, defying President Trump. The sparks will begin to fly between the Trump administration and the Federal Reserve, if Chairman Powell continues to defy the President. The US Dollar was softer, closing out the week, with the EUR trading back up to 1.1350, while the GBP holds 1.3300.
Commodity currencies benefitted the weaker reserve, with the AUD jumping to 0.6450, while the NZD trades around 0,5950. The big action over the weekend is the Australian election, which is expected to see the incumbent hold on to power. If the marginal polls are incorrect and the opposition is elected, then the markets will not be impacted greatly, other than in a more positive fashion.
Collinson FX: May 2: Shrugging off growth contraction
May Day went by on a positive note, with markets shrugging off the sharp contraction in US GDP growth, attributing this to an abnormally high jump in imports and cuts in Government expenditure. The tariff imposition caused a massive jump in imports to avoid the Trump tariffs, skewing the US GDP numbers, also impacted by the severe re-configuration of the Government under DOGE. Markets digested this and the positive developments on the trade negotiations front, to turn positive into the trading month of May. Equities continued to recover and bond yields fell. The US Dollar recovery continued, with the EUR falling back below 1.1300, while the GBP slumped to 1.3250.The resurgent reserve hit the commodity currencies, with the NZD falling below 0.5900, while the AUD crashed back to 0.6350. The Bank of Japan looks to have completed their rare flutter with interest rate rises, holding rates at 0.50%, calming Asian markets. The Australian trade surplus exploded, as exports jumped more than 7%, although the currency appears to be the major factor. Al eyes now turn to the all-important US Non-Farm Payrolls data, set to be released Friday.
Collinson FX: May 1: Markets plummet, then recover
A shock US GDP reading, for Q1, initially put a panic into markets. US equities plummeted on the open, only to recover later in the day, as the numbers were digested. The Q1 US GDP number collapsed into negative territory, reading minus 0.3%, sending shockwaves into markets on the open. The numbers, when analysed, were due to a 41 % increase in imports, as importers surged imports to avoid the incoming tariff regime. The numbers were also skewed by a sharp falling Government spending, attributed to DOGE and big reductions in waste and employment. European GDP turned positive, in both France, Germany and the EU, as the single market claws the way out of a deep and extended recession. Meanwhile inflation continues to fall on both sides of the Atlantic. The US Dollar was resurgent, with the GBP falling to 1.3340, while the EUR dipped to 1.1350.Commodity currencies were hit by the resurgent reserve, with the AUD dropping below 0.6400, while the NZD has tested the downside of 0.5900. NZ Business Confidence data revealed another big setback, confirming dire conditions prevail in the NZ domestic economy. Australian inflation was steady, holding at 2.4%, allowing the RBA to probably cut rates for the incoming Government, whoever is successful in the election. Attention will turn to the Bank of Japan and their latest interest rate decision and jobs reports from the USA.
Collinson FX: April 30: Confidence creeps back
The market rally was moving on as confidence slowly creeps back. Trade deals with India and Japan appear to be on the near horizon, according to Treasury Secretary Bessent, although the all-important Chinese trade deal, was noticeably not confirmed or discussed. Markets are calming and confidence is slowly returning, although certainty is a necessary commodity. Economic data continues to underperform, with the Dallas Fed Manufacturing Index weaker, while the Jolts Jobs Report was slightly softer than expected. The US Dollar slides to long-term lows, with the EUR trading around 1.1400, while the GBP holds 1.3400.
Commodity currencies surrendered some of the recent gains, with the AUD falling back to 0.6350, while the NZD dropped below 0.5950. Markets are expectant and nervous, awaiting key growth and inflation data, from both Europe and the USA. Local markets are looking closely at the Australian inflation number, ahead of the big Federal Election, this coming week.
Collinson FX: April 29: Markets optimistic
Markets opened the week on a cautiously optimistic note, with equities posting small gains across the board. The US Dollar remained soft, with the EUR regaining 1.1350, while the GBP pushing back towards 1.3400. There was very little to guide markets on the economic data front, but there is an avalanche of data coming, this week. This could be the first week this month not dominated by the US/China trade war, which would be a blessing, as resolution becomes closer.Commodity currencies took advantage of the weaker reserve, with the AUD regaining 0,6400, while the NZD broke back above 0.5950. This week has a plethora of global data releases including GDP growth, inflation and employment data from Europe and the USA. One thing is certain, it will not be boring!
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