Retail sales in the United States decreased by 0.9% in May, performing worse than the expected 0.7% drop. This downturn suggests consumer spending might be under pressure.

The EUR/USD currency pair has fallen below the 1.1500 mark following comments by President Donald Trump regarding potential US actions against Iran, leading to a stronger US Dollar. Similarly, GBP/USD dropped below 1.3500, influenced by risk-averse market sentiment amid Middle East tensions.

Gold And Bitcoin Updates

Gold prices are fluctuating below $3,400 as traders hold back from major movements ahead of the Federal Reserve’s upcoming policy decisions. Additionally, Bitcoin’s value experienced a slight decline to around $106,000, following President Trump’s early departure from the G7 summit due to national security concerns.

In China, economic data from May presents a mixed picture with strong retail performance but weaker figures in fixed-asset investment and property prices. Despite this, indications are that China is on track to meet its growth targets for the first half of 2025.

That retail sales drop in the US was more than just a soft number—it tells us outright that consumer demand is faltering, and not by a slight margin. A 0.9% contraction, especially when expectations were already lowered to -0.7%, reveals pressure where it matters most: everyday expenditure. When American shoppers pull back, it often reflects growing concern about income stability or rising living costs, both of which can feed directly into broader macro behaviour.

Now, this pressure on domestic consumption doesn’t exist in a vacuum. From our vantage point, it could add downward pressure on inflationary data, giving central banks less incentive to maintain current rate paths. That’s already being baked into expectations for the Federal Reserve’s next steps—every statement now holds weight, as even a subtle shift in tone could redirect volumes across the board.

Meanwhile, the sharp reaction in EUR/USD can’t just be chalked up to normal market movement. With Trump suggesting more assertive action in the Middle East, the Dollar has caught a wave of defensive buying. In the short-term, the resulting strength in the greenback isn’t about interest rate differentials—it reflects a hunt for perceived safety. EUR/USD breaking below 1.1500 lays bare a certain vulnerability: sentiment-heavy flows overpowering technical ground. It’s not just a currency story—it mirrors a broader risk-down shift that’s affecting assets across classes.

Cable slipping under 1.3500 followed the same pattern. What we’re seeing from an order flow perspective is clear aversion to holding anything risk-sensitive while geopolitical nerves are tightening. It’s especially evident in how volumes thinned after the drop—no appetite for catching the bounce, which underlines prevailing uncertainty.

Federal Reserve And Market Sentiment

Attention has naturally turned to where the Fed stands. Gold’s inability to sustain rallies above $3,400 signals that people are more inclined to wait than to chase. That sort of indecision in precious metals usually suggests markets are preparing for policy clarity they don’t yet have. The Fed’s tone, and whether it offers leeway for rate cuts in the second half of the year, will determine how soon traders re-engage in directional bets.

Bitcoin’s soft drift back toward $106,000, following that unplanned White House exit from the G7, isn’t noise. We think this reflects growing caution over policy cohesion domestically, as well as unease around broader diplomatic engagements. It’s not uncommon for digital assets to mirror real-world geopolitical stress; that’s exactly what we’re seeing. The market priced in risk, not optimism—so any policy calm in the coming week could be met with renewed flows back in.

Shifting to Asia, China’s latest data looked unbalanced but still constructive. Retail momentum held up well, but static investment growth and a lukewarm property sector keep upside in check. There’s good evidence now that the government has room to ease conditions further—especially if external demand starts to crack. For now, their overall growth track seems intact, but reliance on consumer resilience domestically will become more important.

We find ourselves in a market where flows speak louder than headlines. The way that global sentiment clusters around single events—be it a comment on Iran or a shift in consumer data—requires staying adaptive, not just reactive. With policy updates looming and asset strength changing fast, this is becoming less about trends and more about timing. Waves are forming. Picking the right one matters more than being early.

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