FX Market Preview – May 2025

“Liberation Day” has marked a turning point this year, not only in the FX world, but across financial markets. In a White House Rose Garden draped with dozens of star-spangled banners, President Trump announced the biggest hike to tariffs in over a century, indiscriminately targeting allies and foes alike for their trade imbalances with the US. The breadth and severity of the tariffs far exceeded market expectations, with the average tariff rate rising above 20%, while China and other Asian countries faced levies in excess of 50%. As investors realised the severity of the restrictions, they instantly shifted to a ‘risk off’ mode. Following 2nd April, Trump sent markets on a rollercoaster ride, making it increasingly apparent that his political flip-flopping stems from a poorly thought out and inadequately executed plan. The lack of dissenting voices within the administration has offered little reassurance, although markets have recently stabilised with Trump appearing to heed Bessent’s counsel more closely. When US Treasury yields began to rise while US equity markets and the dollar plunged alarmingly, Trump succumbed to the market pressure.

Please click link for our full May FX market report – https://go.on.ebury.com/FXPreview_May2025

Highlights:

– “Liberation day” prompts risk-off shift across markets.

– US dollar plunges amidst “Sell America” trade.

– CHF, EUR and JPY soar as investors seek refuge.

– ECB makes cut and BoE is set to do the same in May.

– US trade negotiations will remain front and center.

If you wish to discuss the impact regarding current market conditions and how Ebury can help mitigate risk when it comes to your businesses currency exposures, then please get in touch.

Have a great day.