Insights 
VT 
During the Asia-Pacific trading session, the USD strengthened, with limited fresh economic data or news driving the movement. UK retail sales in May increased by only 1%, the slowest growth rate in six months, after a previous 7% rise.
Australia’s business conditions fell to a 4.5-year low, according to the National Australia Bank survey for May 2025, with business confidence showing only a minor improvement. In Japan, Bank of Japan Governor Ueda stated he would raise rates if inflation increased, but real rates remain negative as inflation is below the 2% target.
Japanese Government Bonds Appeal
Japanese Finance Minister Kato appealed to domestic buyers to purchase and hold Japanese Government Bonds due to concerning issues. Consequently, GBP, AUD, JPY, and other currencies like NZD, CHF, and CAD declined against the USD, indicating widespread US dollar strength.
Despite currency fluctuations, local stock markets saw gains, as did US equity index futures on Globex. The ongoing US-China trade discussions, set to continue in London on Tuesday, provided no new negative developments, which helped market sentiment. Meanwhile, Bitcoin traded above US$110,000.
What we’ve seen so far can be interpreted as a broad reassertion of dollar strength, reinforced not by any fresh catalyst but rather by the absence of one. Markets often move as much due to what doesn’t happen as what does, and this session illustrated that pattern clearly. With limited data releases and a quiet news flow, currencies defaulted to underlying trends—and in the current environment, that trend has been in favour of the USD.
The modest gain in British retail activity points to slowing momentum, and in isolation, wouldn’t normally justify a material move in the pound. However, combine that with lacklustre consumer signals elsewhere and you get an accentuated effect. It suggests softness in spending that may linger, particularly if inflation stays sticky or real wages stagnate. Any bounce in consumer confidence or aggressive rate shifts would catch the market off guard, but neither appears on the horizon.
Broader Weakness in Currencies
The weaker figure from Australia’s business survey was more than just a passing headline. This low in business conditions, now at the worst point in nearly five years, casts doubt on the sustainability of recent growth. It exposes gaps—in confidence, forward orders, and margins—that haven’t yet found a floor. Though the confidence metric showed a slight uptick, it doesn’t outweigh the broader weakness. To us, that implies increasing hesitation in capital allocation across sectors, which naturally weighs on the chances of a near-term rebound. Rate chatter there will need to be closely assessed, but don’t expect major changes unless employment or inflation data shift dramatically.
From Tokyo, the central bank reiterated what’s becoming a persistent problem: inflation lingers well below target, yet policy settings are stuck in first gear. The comment around possible hikes was conditional and should be remembered as such. It points to preparedness—not intention. The disconnect between real rates and inflation bolsters the idea that upward rate movements remain on standby, used more as a verbal tool than an active strategy.
Meanwhile, bond-buying pleas from policymakers serve as a quiet warning. They suggest pressures building in the domestic market that aren’t yet reflected in primary yield curves. That officials feel the need to boost domestic participation implies upcoming supply-demand imbalances, possibly linked to fiscal expansion or tapering foreign inflows. It’s not a demand crisis yet—but it is a hint.
Broader weakness in currencies didn’t stem from isolated poor data, but from a reinforcing loop of underperformance and dollar resilience. Frankly, there wasn’t much to be optimistic about across CAD, CHF, or NZD either. These moves weren’t erratic—they were measured, steady, and grounded in sentiment favouring stability and liquidity, both of which the greenback typically offers.
And yet, equities offered a brief counterpoint. We wouldn’t call it enthusiasm—more like a lack of fear. Gains in local equity indices and US futures were supported less by earnings rotation and more by the absence of risk-off triggers. Ongoing discussions between two of the world’s largest economies stayed civil, and that was enough to invite some buying. It didn’t require optimism, just relief.
Bitcoin staying elevated above US$110,000 adds a layer of liquidity risk perception. It’s not so much where digital assets trade, but what they signal: comfort with risk and a hunt for yield. Traders shouldn’t assume these levels reflect direction—they reflect tolerance. And that could shift quickly with macro surprises.
We’re watching for policy hints—not statements simply repeated. It’s the unsaid that often drives recalibration. The coming days shouldn’t be treated as aimless—they present opportunities in imbalance and overreaction. For now, risk positioning must account for the asymmetry between what central banks say and what markets expect.
