Summary
This technical report provides an analysis of the global trends and events influencing foreign exchange (FX) volatility as of May 2025. It discusses the impact of recent tariff wars and trade policy changes under the Trump administration, which have contributed to significant market turmoil. The report outlines how the US dollar index has experienced a notable decline, reflecting a shift in its status from a safe haven to a risk-sensitive currency. Additionally, it details the volatility in financial markets, including the dramatic sell-off in US Treasuries and the fluctuating performance of various currencies such as the euro and the British pound. The report also highlights the ongoing geopolitical risks and macroeconomic uncertainties that are likely to keep market volatility elevated. It aims to assist small and medium enterprises (SMEs) and corporations in identifying potential opportunities or risks related to cross-border trade, ultimately seeking to improve their financial outcomes through informed strategies.
