Insights 
VT 
In April, Canada’s foreign portfolio investment in Canadian securities stood at $-0.01 billion, outperforming expectations of $-2.94 billion. This indicates a smaller withdrawal than anticipated from Canadian securities by foreign investors.
The May data from China presents a mixed economic picture with robust retail sales coupled with weaker fixed-asset investment and property pricing. Despite these mixed signals, it appears that China remains on target to achieve its growth objectives for the first half of 2025.
Currency Movements
The EUR/USD saw a decline, reaching new weekly lows as the US dollar drew strength after US President Trump’s comments on the Middle East situation. Likewise, GBP/USD approached the 1.3400 level, marking its lowest in three weeks amidst market tension.
Gold prices remained below $3,400, demonstrating traders’ hesitance to make large moves ahead of the Federal Reserve’s policy announcements. Meanwhile, Bitcoin experienced a slight decline, settling around $106,000 due to geopolitical concerns involving Iran and Israel.
Canada’s marginal foreign portfolio investment outflow in April, markedly smaller than market expectations, points to a slight resilience in investor sentiment toward Canadian securities. Although foreign investors did reduce their holdings, their scale-back was far gentler than forecast. That offers a subtle signal—international appetite for Canadian instruments may be returning with caution, especially in fixed-income assets, given their relative appeal when positioning around upcoming policy directions.
China’s Economic Situation
On the macro front, China’s latest figures reflect more than just a patchy economic story. With retail sales clocking in well ahead of trend, the strength in consumption remains intact, helping to bolster overall momentum. However, we saw clear headwinds from property and infrastructure—fixed asset investment and housing values dipped, suggesting waning confidence in long-term capital expenditure and construction. Despite these pressures, it seems authorities remain on track to meet growth benchmarks for the first half of 2025, which could mean more measured stimulus rather than sweeping interventions. We are reading this as a cautious but persistent hand on the wheel from policymakers in Beijing.
In FX, the US dollar’s peaks late last week were clearly driven by risk-off flows, sparked by recent statements on Middle East tensions from the US president. These comments introduced further unease into already strained geopolitical paths. The euro couldn’t hold ground, and the pair sank to new weekly troughs, with the RSI still punching lower. Sterling wasn’t spared either; it tracked towards three-week lows close to 1.3400 as risk sentiment faded. Despite relatively stable UK data, uncertainty around global trade and regional politics quickly spilled over into pressure on the pound.
Gold’s inability to mount a decisive rally tells its own story. Hovering under $3,400, the metal continues to trade sideways, offering little in the way of clean signals. With Federal Reserve policymakers set to speak shortly, positioning remains light, and implied volatility has pulled back. This cautious tone suggests broader uncertainty. We’ve been watching ETF flows into gold-backed funds—they remain tepid. Few are willing to commit until there’s clarity on future rate paths.
As for digital assets, Bitcoin’s gentle drift downwards—currently hovering around $106,000—mirrors broader hesitancy. The market is clearly responding to geopolitical risk, this time related to rising friction involving Iran and Israel. This narrative seems to cap further momentum. From a technical perspective, support levels are holding but remain vulnerable; derivative markets show reduced leverage on the long side. For those active in contracts, this reduced leverage combined with weakening spot correlation points to a tactically neutral outlook for now.
We’ve observed cross-asset volatility compressing, including options markets in energy and equities, which ties in well with a wait-and-see approach. Position-sizing is likely to remain conservative until scheduled central bank meetings conclude. The way forward probably involves reducing directional exposure and favouring relative value trades tied to macro-event catalysts.
