Summary
This technical report provides an analysis of the global trends and events influencing foreign exchange (FX) volatility as of June 2025. It discusses the impact of US policymaking on investor sentiment and global markets, highlighting the recent temporary reduction in tariffs between the US and China, which initially boosted risk appetite and led to a rebound in global equities. However, the report notes that optimism was short-lived due to renewed trade tensions, particularly President Trump's tariff threats against the EU. The report also examines the US fiscal outlook, including the implications of rising long-term Treasury yields and the potential effects of tariff revenues on the deficit. Additionally, it details the performance of various currencies, including the euro and sterling, against the US dollar, and analyzes the broader economic implications of these currency movements. The report aims to assist SMEs and corporates in navigating the complexities of cross-border trade amid ongoing market volatility.
