📉 Volatile Sentiment Driven Once Again by Bonds and Central Bank Speeches FX Market Outlook｜Wednesday, May 28, 2025
📉 Volatile Sentiment Driven Once Again by Bonds and Central Bank Speeches
FX Market Outlook｜Wednesday, May 28, 2025
Yields back in focus – is the USD strength just temporary?
🧭 Market Focus: Bond Auctions and Central Banker Comments Take the Lead Again
From the Tokyo to European sessions, FX markets responded once again to rising yields following Japan’s 40-year bond auction. However, USD/JPY’s reaction remained limited, with a slight upside bias favoring the dollar.
The key driver was a statement by John Williams, President of the New York Fed, who remarked that:
"If inflation deviates significantly from the central bank’s target, decisive action is necessary."
This comment renewed expectations that the Fed may maintain a hawkish stance, supporting the dollar.
🌍 Market Structure: Temporary Pause in “US Asset Offloading” Amid Uncertainty
Recent capital outflows from US assets appear to have paused—for now.
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US Consumer Confidence Index came in stronger than expected, lifting both US equities and the dollar.
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Trump’s delay of tariffs on EU goods (now expected July 9) eased risk-off sentiment.
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Dollar Index rebounded for two consecutive sessions.
Still, market fundamentals remain unclear, with sentiment stuck in a state of hesitation. Neither long-term investors nor short-term traders are showing strong conviction.
🗓 Key Events Scheduled for Today
| Time | Event | Importance |
|---|---|---|
| Europe | 🇫🇷 France GDP (Q1, final), PPI, Consumer Spending | ★☆☆ |
| Europe | 🇩🇪 Germany Employment Report (May) | ★☆☆ |
| Asia | 🇮🇳 India Industrial Production (Apr) | ★☆☆ |
| US (NY session) | 🇺🇸 MBA Mortgage Applications, Richmond Fed Manufacturing Index (May) | ★☆☆ |
| US (NY session) | 🇺🇸 2-Year FRN & 5-Year Note Auctions | ★★☆ |
| Late NY | 🇺🇸 FOMC Minutes (May 6–7 meeting) | ★★★ |
| Late NY | 📊 NVIDIA Earnings Report | ★★★ (impact on US equities) |
Also, scattered comments from key figures:
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🇺🇸 Kashkari (Minneapolis Fed) – speech at Keio University
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🇬🇧 Pill (BoE Chief Economist) – central bank conference
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🇪🇺 Thedéen (Riksbank Governor)
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🇪🇺 ECB: Inflation Expectations Report (April)
Plenty of potential catalysts throughout the day.
📌 Strategy Summary
| Pair | Outlook | Notes |
|---|---|---|
| USD/JPY | Neutral | Whipsaw price action on US yields. Limited upside/downside. Sit and watch. |
| EUR/USD | Sideways | Rangebound with no clear direction. Likely to follow USD cues. |
| GBP/USD | Range-bound | Lack of fresh catalysts – good for short-term scalping based on technicals. |
| Cross JPY pairs | Mixed | Too little momentum to pick a clear direction. USD-led moves dominate. |
✅ Conclusion: Today’s Keyword is "Flexibility"
This week continues to be unpredictable, with shifting market themes each day. Traders need to stay agile.
Maintain a "sell-on-rally bias against the USD", but keep alternative scenarios ready.
The FOMC minutes could act as a pivot point for the broader trend. Having flexible plans is key to navigating this uncertain environment.
