In April, Canada’s foreign portfolio investment in Canadian securities was at $-0.01 billion, which is better than the expected $-2.94 billion. This suggests that foreign investors pulled back less money from Canadian securities than anticipated. China’s May data gives a mixed economic signal. Retail sales are strong, but fixed-asset investment and property prices are weak. Still, it appears that China is on track to meet its growth goals for the first half of 2025.

Currency Movements

The EUR/USD pair fell to new weekly lows as the US dollar gained strength following US President Trump’s remarks about the Middle East. Similarly, the GBP/USD approached the 1.3400 mark, reaching its lowest point in three weeks amid market tensions. Gold prices stayed under $3,400, showing that traders are hesitant to make significant moves ahead of the Federal Reserve’s policy updates. Meanwhile, Bitcoin dropped slightly to around $106,000, partly due to geopolitical concerns involving Iran and Israel. Canada’s small foreign portfolio investment outflow in April, much smaller than expected, indicates some resilience in how investors view Canadian securities. While foreign investors did cut back on their holdings, the reduction was gentler than predicted. This could mean that international interest in Canadian assets, especially fixed-income ones, may be cautiously returning, particularly as policies evolve.

China’s Economic Situation

Looking at the bigger picture, China’s latest data show more than just a mixed economic scenario. Strong retail sales indicate solid consumer strength, which helps overall growth. However, challenges in property and infrastructure are apparent, as fixed-asset investment and housing values have decreased, signaling less confidence in long-term spending and construction. Despite these challenges, authorities seem set to hit growth targets for early 2025, likely opting for measured stimulus instead of drastic actions. This suggests that policymakers in Beijing are taking a careful approach. In currency markets, the recent rise of the US dollar was mainly due to risk-averse trading after the US president’s comments on Middle East tensions, which added to existing geopolitical concerns. The euro fell and hit new weekly lows, with the RSI trending downward. The British pound also faced pressure, nearing three-week lows around 1.3400 as risk sentiment faded. Despite steady UK data, worries about global trade and regional politics weighed heavily on the pound. Gold’s failure to gain traction tells its own story. Trading below $3,400, it is stuck in a sideways pattern with no clear direction. With Federal Reserve officials set to speak soon, trading activity is light, and implied volatility has decreased. This cautious stance reflects broader uncertainty, and ETF flows into gold-backed funds have been lukewarm, as many hesitate to invest until there’s more clarity on future interest rates. As for digital currencies, Bitcoin’s slight decline—currently around $106,000—reflects wider market hesitance due to geopolitical risks related to Iran and Israel. This scenario may limit further upward movement. Technically, support levels are holding but are still at risk; derivative markets indicate less leverage on long trades. For traders involved in contracts, this reduced leverage and weaker spot correlations suggest a neutral outlook for now. We are seeing reduced volatility across various markets, including energy and equities, which aligns with a wait-and-see strategy. Conservative position-sizing is likely to continue until central bank meetings have concluded. The path ahead may involve lowering directional bets and focusing on trades that offer relative value, tied to key macro events. Create your live VT Markets account and start trading now.

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