During the Asia-Pacific trading session, the USD gained strength with little new economic data affecting the movement. In the UK, retail sales for May rose only 1%, the slowest growth in six months, following a 7% increase the previous month. In Australia, the National Australia Bank’s survey revealed that business conditions dropped to a 4.5-year low in May 2025, while business confidence showed only a slight improvement. In Japan, Bank of Japan Governor Ueda mentioned he would consider raising rates if inflation rises, but real rates remain negative since inflation is below the 2% target. Japanese Finance Minister Kato urged local buyers to purchase and hold Japanese Government Bonds due to ongoing concerns. As a result, currencies like GBP, AUD, JPY, NZD, CHF, and CAD all fell against the USD, highlighting the strength of the US dollar. Despite these currency changes, local stock markets and US equity index futures on Globex reported gains. The ongoing US-China trade discussions, which will continue in London on Tuesday, did not bring any new negative news, boosting market confidence. Additionally, Bitcoin traded above US$110,000. This situation shows a clear resurgence of dollar strength, not driven by new factors but rather by the lack of negative news. Markets often react to what doesn’t happen, and this session is a perfect example. With little new data and limited news, currencies returned to existing trends—and currently, that trend favors the USD. The modest increase in British retail activity suggests a slowdown; on its own, it might not have a significant impact on the pound. However, combined with weak consumer signals elsewhere, it creates a stronger effect. This indicates persistent softness in spending, especially if inflation remains high or real wages stagnate. Any unexpected rise in consumer confidence or significant rate changes could surprise the market, but neither seems imminent. The disappointing results from Australia’s business survey highlight more than just a single headline. Business conditions are at their worst in nearly five years, casting doubt on recent growth sustainability. This indicates weaknesses in confidence, forward orders, and margins that still need to stabilize. While there was a small uptick in confidence, it doesn’t counteract the overall weakness. This suggests increasing caution in capital spending across sectors, which could hinder a quick recovery. Any discussions about rate changes will warrant close attention, but expect limited alterations unless unemployment or inflation data change dramatically. In Tokyo, the central bank reiterated a persistent problem: inflation is well below target, while policy settings remain unchanged. The comments about possible rate hikes were conditional and should be interpreted as readiness rather than immediate action. The gap between real rates and inflation suggests that any rate increases will be more about communication than actual strategy right now. Policymakers’ calls for more bond buying serve as a subtle warning. This indicates building pressures in the domestic market not yet seen in primary yield curves. The need to encourage local involvement hints at potential supply-demand imbalances, possibly due to increased fiscal spending or reduced foreign investment. It’s not a crisis yet, but it suggests caution. We see broader currency weaknesses as a result of a cycle of poor performance and ongoing dollar strength. There wasn’t much positivity for CAD, CHF, or NZD either. These movements were not random but rather steady and based on a preference for stability and liquidity—characteristics typically associated with the US dollar. However, equities provided a brief counterargument. We wouldn’t describe it as enthusiasm—more a lack of fear. Local equity indices and US futures rose mainly due to the absence of risk-off signals rather than earnings shifts. The civil ongoing discussions between the US and China offered some reassurance, inviting buyers into the market without requiring strong optimism—just relief. Bitcoin remaining above US$110,000 adds another layer of liquidity risk. It’s not just about where digital assets are priced, but what they signal: a comfort with risk and a search for returns. Traders should not assume these levels indicate direction but rather reflect tolerance, which could change quickly with unexpected economic news. We are looking for hints about policy changes—not just repetitive statements. Often, what is left unsaid is what drives market adjustments. The upcoming days should not be seen as aimless—they offer opportunities amid imbalances and overreactions. For now, risk awareness must consider the gap between what central banks communicate and market expectations.

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