Collinson FX: May 16: Market shift to responding to economic data releases
by Collinson FX 16 May 10:17 BST
16 May 2025
NZ Nationals - RS Feva - Murrays Bay - May 11-12, 2025 © Justin Mitchell
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Collinson FX: May 16: Tariffs depress US inflation
Markets began to trade according to economic data releases, rather than fears held over global trade wars.
The latest US PPI was softer than expected, joining the last CPI inflation reading, confirming the tariffs have not raised inflation, but in fact the opposite. UK GDP growth surprised, jumping 0.7% for Q1, allaying fears of economic catastrophe that many may feel. EU GDP growth was positive for Q1, giving hope to markets.
The trade wars are not forgotten and focus may now turn to those Countries that have not got an agreement in place, with the USA.
The EUR traded around 1.1200, while the GBP slipped back below 1.3300, despite stronger than expected GDP numbers.
Commodity currencies failed to gain momentum overnight, with the AUD drifting back toward 0.6400, while the NZD lost it’s fight with 0.5900.
Australian Employment data was steady, while the latest inflation report, confirmed softening continues.
Local markets will look at the latest Japanese GDP data, out today, but Geo-Political events may overwhelm
Collinson FX: May 15: UK/US Trade Deal confirmed
Markets are building on the recent gains, enjoyed early in the week, due to the US trade agreements.
The US/China 90-Day trade agreement, accomplished over the weekend in Switzerland, was a massive boost to market sentiment globally.
US inflation has continued to soften, defying market criticisms of the new Trump tariff polices, boosting equities and the US Dollar.
The Dollar has drifted since in trade, with the EUR regaining 1.200, while the GBP looked to regain 1.3300. All eyes now turn to the inflation and growth data coming from Europe. German inflation was stagnant, while numbers of GDP growth are expected overnight.
The weaker reserve allowed commodity currencies to rally, with the NZD regaining 0.5900, while the AUD pushed back to 0.6450. Trade remains the overriding issue dominating markets and look for gains from the Trump tour of the Middle East.
Collinson FX: May 14: UK/US Trade Deal confirmed
Markets eased overnight, following the surge in confidence, triggered by the 90-Day Trade Agreement between China and the USA.
The temporary agreement alleviates many market fears over the disruption to global trade. The focus then turned to US CPI inflation data, released overnight, which was benign. This was a further boost to market sentiment. The USD softened, allowing the EUR to regain 1.1150, while GBP recovered to trade 1.3250.
Commodity currencies are enjoying the return of confidence to global trade, as trade exposed economies and currencies, are beneficiaries of this.
The AUD rallied to 0.6450, while the KIWI regained 0.5900. Attention remains focused on global trade wars, while GDP growth in Europe and inflation remain key measures.
Collinson FX: May 13: UK/US Trade Deal confirmed
Markets surged on the open, following the announcement of a US/China trade agreement. US equity markets rallied strongly, as did US Bond Yields on the great news, adding to the Friday agreement between the US and the UK. This is what markets were waiting for and market sentiment hit overdrive.
The US Dollar also built on recent gains, with the EUR falling below 1.1100, while the GBP dropped to 1.3200. The EUR will remain under pressure, as they are without a trade agreement with the US, and liable for future punitive tariffs.
Markets will be pre-occupied with the trade wars and resolutions, while inflation will be measured with the latest CPI number, set to be released in the US tomorrow.
Commodity currencies suffered the resurgent reserve, with the AUD slipping below 0.6400, while the NZD finally surrendered 0.5900. The impact of the rising US Dollar, was not as pronounced on the commodity currencies, as this signals an improvement in commodity trading conditions.
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