Global Macro & Market Overview - May 5th 2025

Kevin Lam
May 5
3 min read

As May 2025 unfolds, global markets continue to reflect a complex mix of macroeconomic pressures, central bank shifts, and geopolitical tensions. Here is a complete breakdown of key trends across major economies and asset classes.

🌍 General Market Themes

The US dollar began the week under pressure amid holiday closures in major financial centers.
Asia-Pacific currencies are broadly stronger, supported by speculation around US semiconductor tariffs and renewed talk of a Plaza Accord-style currency realignment.
Risk sentiment remains fragile, with US equity futures down up to 0.9% and oil and gold markets seeing notable moves. Gold rebounded 2% after last week’s losses, while WTI oil recovered to $57.50 following OPEC+ output adjustments.

🇺🇸 United States (USD)

Despite a strong April jobs report (177K vs 130K expected), the dollar failed to rally, highlighting growing concerns around trade disruptions and slowing imports from China (down 60% in three weeks).
Markets believe the Fed will hold rates steady this week, though soft survey data continues to raise questions.
Hopes for resumed US-China trade talks provided temporary support for the greenback, but investor skepticism lingers.

🇪🇺 Eurozone (EUR)

Core inflation surprised to the upside at 2.7%, yet ECB officials remain cautious as global trade risks threaten growth.
The ECB is widely expected to cut rates again at its June 5 meeting.
Technical indicators show the euro hovering in a tight range; a break below $1.1260 could indicate further downside.

🇬🇧 United Kingdom (GBP)

The Bank of England is set to deliver another 25bps rate cut, with markets pricing in up to three cuts for 2025.
Sterling has shown weakness, and technical analysis points to a potential breakdown if $1.3235 support is breached.

🇯🇵 Japan (JPY)

The BoJ's dovish hold solidified a technical bottom for USD/JPY, projecting potential gains toward 148.
However, resistance near 146 and support at 143.40 are key near-term levels to watch.
Political signals suggest a willingness to accept yen strength in exchange for reduced tariffs.

🇨🇭 Switzerland (CHF)

Capital inflows into the franc raise fears of SNB intervention or a return to negative rates if EUR/CHF drops below 0.90.
A stronger franc poses deflationary risks and hurts export competitiveness.

🇨🇦 Canada (CAD)

The BoC has paused rate cuts due to US trade uncertainty. A June cut remains a 50/50 prospect.
USD/CAD remains rangebound, with resistance around 1.3860.

🇦🇺 Australia (AUD)

Core inflation exceeded forecasts, limiting scope for large RBA cuts in May.
A decisive electoral win for the Labor Party helped lift the Aussie to a 5-month high (~0.6490), with next resistance near 0.6525.

🇳🇿 New Zealand (NZD)

The Kiwi remains elevated near 0.60 but is vulnerable to global risk sentiment and slower growth.
The RBNZ is expected to cut the OCR from 3.75% to 2.50% by year-end.
Market pricing underestimates the chance of a 50bps cut; interest rates across swaps and bonds are forecast to decline through 2026.

🇨🇳 China & Emerging Asia (CNY, TWD, MYR)

The offshore yuan hit a multi-month low as trade hopes boosted Asia FX.
Taiwan and Malaysia saw sustained currency rallies, though intervention and tariff risk remain.
Many regional centers were closed, but attention is shifting to China’s April PMI and US tariff decisions this week.

🇲🇽 Mexico (MXN)

The peso is steady, but inflation and weak growth pose challenges.
A 50bps Banxico rate cut is likely unless Thursday’s CPI surprises to the upside.
USD/MXN has formed a base near 19.50; a breakout above 19.75 would signal a move toward 20.00.

⚖️ Commodities

Gold rebounded 2% to retake $3,300 after last week’s selloff.
Oil (WTI) recovered to $57.50 after dropping to $55 on OPEC+ output news.

Final Thoughts

Across the board, central banks are tilting dovish, but expectations are increasingly nuanced and data-dependent. Trade tensions, especially US tariffs, remain the biggest wildcard.

Currency markets are reacting to both real economic data and growing speculation about coordinated global FX policy moves.

Stay tuned for this week’s Fed decision, US tariffs on semiconductors, and key inflation readings across multiple regions.