ECB Asks European Lenders to Evaluate U.S. Dollar Needs in Stress Scenarios

Forex

Economic

Summary:

Supervisors from the European Central Bank (ECB) are urging some of the region’s lenders to evaluate their need for U.S. dollars in times of financial stress.

Supervisors from the European Central Bank (ECB) are urging some of the region’s lenders to evaluate their need for U.S. dollars in times of financial stress. This comes as part of planning for scenarios where they may not be able to rely on the Federal Reserve under the current U.S. administration, according to Reuters, citing three individuals knowledgeable about these discussions.

The funding needs of nearly 20% of euro zone banks are in U.S. dollars. These banks often borrow in markets for short-term funding, which can abruptly cease in periods of financial stress. Historically, European central banks have borrowed dollars from the Federal Reserve to compensate for these shortfalls.

The Federal Reserve has lending facilities in place with the ECB and other major counterparts to ease shortages of the global reserve currency and prevent financial stress from affecting the United States. Two of the sources familiar with the ECB’s supervisory discussions stated that the Fed has never insinuated that it would not support these backstops, even in the current climate.

However, due to President Donald Trump’s questioning of long-established defense and trade agreements with European allies, there is growing concern that the Federal Reserve’s stance could change. These sources, who requested anonymity due to the sensitive nature of banking supervisory matters, expressed this concern.

As a result, ECB supervisors are urgently asking the region’s lenders to assess gaps in their balance sheets.

Source：Reuters

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Glendon

Economic

Commodity

Opec has downgraded its 2025 and 2026 non-Opec+ liquids supply growth forecasts for a second month in a row, mainly driven by lower output expectations from the US.

In its Monthly Oil Market Report (MOMR), published today, Opec revised down by 100,000 b/d its non-Opec supply growth forecasts for 2025 and 2026 to 810,000 b/d and 800,000 b/d, respectively. This follows identical downgrades of 100,000 b/d for each year in Opec's previous report.

While Opec did not give a reason for its supply revisions, the recent decline in oil prices is likely to have played a role. Production growth in the US, particularly in the shale patch, is highly sensitive to price movements, for example.

US shale producer Diamondback Energy chief executive Travis Stice earlier this month said US onshore crude production had likely peaked as drilling activity slowed in response to lower oil prices.

Opec sees US supply growing by 330,000 b/d in 2025 and 280,000 b/d in 2026, compared with 450,000 b/d and 460,000 b/d in its March MOMR.

Lower non-Opec+ supply expectations may have played a role in the decision by some Opec+ members to accelerate their planned supply increases for May and June.

Opec kept its global oil demand growth forecasts unchanged for this year and next at 1.3mn b/d and 1.28mn b/d, respectively. These forecasts remain bullish compared to those of the IEA and US' EIA.

Opec+ crude production — including Mexico — fell by 106,000 b/d to 40.92mn b/d in April, according to an average of secondary sources that includes Argus. Opec puts the call on Opec+ crude at 42.6mn b/d in 2025 and 42.9mn b/d in 2026.

Source: Argus Media

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Warren Takunda

Economic

Businesses will need to show they are keeping a lid on prices before there can be further interest rate cuts, according to the Bank of England interest rate-setter Catherine Mann.

In a warning to retailers and consumer goods companies to resist pushing up prices by more than the increase in their costs, Mann said she was wary of firms looking to rebuild their profit margins after a squeeze in recent years.“I need to see the loss of pricing power, I need to see that firms are starting to be much more moderate in setting their prices,” she said.

Mann, a former chief economist at the Organisation for Economic Co-operation and Development, was one of two policymakers who voted to hold interest rates at 4.5% at a meeting of the Bank’s monetary policy committee last week. A majority of five members voted to cut by a quarter point to 4.25%, while two voted for a steeper half-point reduction.

Mann has said previously she is ready to cut interest rates steeply once the battle against inflation is won.

However, she was concerned that rising levels of goods price inflation was pushing up household expectations of price increases in the months ahead.

She said there was the prospect of lower import prices from the knock-on effect of Donald Trump’s tariffs on countries such as China, despite the 90-day truce announced on Monday, which could cause cheaper exports to be diverted to Britain.

“There will be some trade diversion that will lead to moderation of import prices in the UK but there’s a lot of margin between the dock and the shelf,” she said, adding: “Goods price inflation is actually going up, not down.”

The Bank’s chief economist, Huw Pill, said earlier this week that he was concerned about a sea change in the labour market that meant higher wages would persist into 2027.

Pill, who voted with Mann to freeze interest rates last week, said it was not certain inflation would fall if higher wages become persistent.

Speaking on CNBC, Mann said Britain’s labour market had been more resilient than expected earlier in the year when she voted to cut interest rates.

“The first observation is that the labour market has been more resilient. Now, yes, we’ve had some prints that are indicative of a slowing labour market, but it is not a non-linear adjustment,” she said.

UK labour market data published on Tuesday showed a fall in employment, a drop in wages growth and a rise in vacancies, indicating that the labour market continued to weaken.

Some economists said the figures showed the pressure on companies from rising taxes and slowing economic growth was only having a modest impact on workers, leading to concerns that prices will remain higher for longer.

Goldman Sachs said it expected economic growth to also prove more resilient in the UK and the eurozone, lowering expectations of further interest rate cuts.

The investment bank now expects UK interest rates to be lowered to 3% by next February, before the Bank of England stops its cutting cycle, having previously forecast rates would drop to 2.75% by next March.

UK inflation is expected to hit 3% in April when figures are published next week after a fall to 2.6% in March.

The Bank expects inflation to peak at an average 3.5% in the third quarter of the year, largely in response to rises in utility bills and council tax, before falling back towards its 2% target during 2026.

Source: Theguardian

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Glendon

Economic

Cryptocurrency

Bitcoin (BTC) remained largely stable after the release of the US Consumer Price Index (CPI) for April 2025, which came in below expectations. The data suggests inflation is continuing to cool, a potentially positive sign for risk-on assets like BTC.

Bitcoin Makes Minimal Move After April CPI Data

The Bureau of Labor Statistics reported a 0.2% increase in April CPI, slightly under the 0.3% forecast. While the figure marked a rebound from the -0.1% decline recorded in March 2025, it still pointed to subdued inflationary pressures.

Year-over-year (YoY), CPI rose by 2.3% – the slowest annual increase since February 2021. Core CPI, which excludes volatile food and energy prices, rose by 0.2% in April compared to 0.1% in March. This was also below the consensus estimate of 0.3%. On a YoY basis, Core CPI remained steady at 2.8%, in line with expectations.

The lower-than-expected inflation data supports the Federal Reserve’s cautious “wait and watch” stance on interest rate cuts, bolstering the case for holding current policy until further macroeconomic clarity emerges.

Despite the positive macro backdrop, Bitcoin’s price reaction was muted. At the time of writing, BTC is trading in the low $100,000 range – approximately 5.1% below its all-time high (ATH) of $108,786 set in January 2025.

Although the price response was mild, technical analysts remain optimistic. Noted crypto analyst Titan of Crypto shared the following chart indicating a potential move to new all-time highs, driven by a strengthening weekly Relative Strength Index (RSI).

Source: Titan of Crypto on X

Similarly, crypto analyst Jelle commented on BTC’s resilience around the $102,000 level, suggesting this may act as a strong support zone. “Not much is left to hold BTC back now,” the analyst noted, indicating confidence in a continued rally.

Source: Jelle on X

BTC Exchange Reserves Depleting, Investors Accumulating

On-chain data also supports the bullish outlook. Crypto influencer Davinci Jeremie pointed out in a recent X post that Bitcoin reserves on centralized exchanges have dropped significantly and are now hovering around 2.4 million BTC – a level that could contribute to a looming supply shock.

Source: Davinci Jeremie on X

Lower BTC reserves on crypto exchanges are likely to bolster the supply shock narrative for the flagship cryptocurrency, which may lead to a parabolic price action. Data also shows that large investors are accumulating BTC.

In a separate X post, crypto analyst Bitcoin Munger shared the following chart which shows that BTC sharks – wallets holding 100 to 1,000 BTC – have been accumulating BTC at a rapid pace. Currently, these entities hold more than 3.55 BTC collectively.

Source: Bitcoin Munger on X

That said, recent data shows that open interest has not risen in tandem with the rise in BTC price, which may be a cause for concern. At press time, BTC trades at $103,311, up a modest 0.1% in the past 24 hours.

BTC trades at $103,311 on the daily chart | Source: BTCUSDT on TradingView.com

Source: CoinGecko

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Blue River

Technical Analysis

NZD/USD dropped to Monday’s low of 0.5845 before bouncing back to retest its 20-day simple moving average (SMA) at 0.5945, as the euphoria about the US-China trade deal faded, weighing on the US dollar. With the price still hovering around this line and near the 50% Fibonacci retracement level of the September–April downleg, the key question now is whether the bulls have enough momentum to break through that resistance and push into the 0.6000 area.

The positive rotation in the RSI and the stochastic oscillator, coupled with the bullish engulfing candlestick pattern formed on Tuesday, may help sustain buying interest. However, some caution is warranted, as the RSI remains on a downward slope, and the MACD continues to ease below its red signal line.

A continuation above the 61.8% Fibonacci level at 0.6020-0.6035 could place the pair back on a bullish track in the short-term picture, with resistance likely emerging near the 0.6100 level or even higher in the 0.6180–0.6220 region. Further gains beyond that could pave the way toward the October 2024 high of 0.6377.

In a bearish scenario, where the pair falls below the 38.2% Fibonacci level at 0.5825, the sell-off could accelerate toward the 0.5670–0.5695 region. A failure to stabilize there could drag the price further down to 0.5540–0.5580 and potentially toward the pandemic low of 0.5468.

Overall, NZD/USD may remain supported in the short term, though a sustained move above 0.6020 is needed to confirm a return to a bullish trajectory.

Source: ACTIONFOREX

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Michelle

Cryptocurrency

The 2.80% spike in the overall crypto market cap has pushed it to $3.38 trillion, with the greedy sentiment lingering as the fear and greed index value positioned at 74. All the major assets have been charted in green, reclaiming their recent highs. Notably, the largest altcoin, Ethereum, has achieved its recovery attempt.

ETH has escaped the downside pressure by securing an 8.97% gain over the last 24 hours. The altcoin could continue trading on the upside if the bulls sustain. Also, a breakout above the $3K threshold is essential to fuel an aggressive upward move.

The altcoin opened the day trading at the bottom range of $2,453. After the bulls came into command, the price rose toward the $2,736 mark, breaking the crucial resistances at $2,577 and $2,706.

Ethereum trades at around $2,675 at press time, with a market cap of $322 billion. The daily trading volume has increased by over 11.94%, reaching $36.64 billion. Furthermore, the market has seen a liquidation of $158.04 million in ETH, as per Coinglass data.

Will Ethereum Bulls Stay in Control?

The four-hour trading chart has exhibited a brief upside pressure, lighting up the green candle. Ethereum could likely climb to the crucial resistance at the $2,710 range. An extended upside correction might send the price toward $2.8K. A sustained bullish momentum triggers a prolonged upward move.

Assuming the bears came in command, the price could retrace to the $2,606 support level. Further downside price action triggers the death cross to emerge, and Ethereum might fall back to the former low at $2.5K or even lower. Additional setbacks could slow down and complicate the recovery.

ETH chart (Source: TradingView)

ETH’s Moving Average Convergence Divergence (MACD) line is settled above the signal line. This implies a bullish crossover, and the asset’s price may gain upward strength. It is often seen as a buy signal. Moreover, the Chaikin Money Flow (CMF) indicator value is found at -0.10 hints at mild selling pressure in the market, with the capital flowing out of the asset.

ETH chart (Source: TradingView)

The altcoin’s daily relative strength index (RSI) at 67.14 indicates that the asset is approaching the overbought territory. This bullish momentum may face resistance or a potential pullback. Besides, Ethereum’s Bull Bear Power (BBP) reading of 180.06 suggests sturdy dominance of bulls in the market.

Source: CryptoSlate

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Warren Takunda

Stocks

London stocks were still steady by midday on Wednesday as investors sifted through a raft of corporate news, but Burberry surged on cost-cutting plans.

The FTSE 100 was flat at 8,603.77.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Stocks stateside have gone on a run as more trade deals are inked, but the baton hasn’t been passed to the FTSE 100, which is flat in early trade.

"The more cautious sentiment may partly have been prompted by concerns that interest rates look set to stay higher for longer in the UK. Bank of England policymakers have been striking notes of wariness about the risk that inflation may stay stubbornly above target. Market expectations for further rate cuts this year have cooled off, with only one to two further reductions being priced in.

"Decision makers are worried that pay growth remains steamy, which could have a knock-on effect on broader price rises. In the three months to March, pay growth including bonuses, came in at 5.5%, above market forecasts. Huw Pill, the chief economist at the Bank of England, voted against cutting rates last week, favouring keeping them unchanged, and other members have stressed they are wary about going too fast."

In equity markets, Marks & Spencer was top performer on the FTSE 100 following recent heavy losses on the back of a cyber attack, after the retailer revealed on Tuesday that some customer information had been stolen in the incident three weeks ago.

Mondi rallied after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, while Hikma gained after an initiation at ‘outperform’ by BNPP Exane.

Burberry jumped as investors welcomed the luxury brand’s turnaround plans. Burberry said it swung to a full-year loss amid a slump in revenue and that 1,700 jobs could be at risk as part of its ongoing turnaround plan.

Russ Mould, investment director at AJ Bell, said: "Despite its results being slightly less bad than feared Burberry is not showing any complacency, with the luxury goods firm announcing some pretty radical steps in its continuing recovery effort.

"Having enjoyed a strong run going into these numbers as relations between two of its key markets - the US and China - seemed to thaw, the momentum has continued as investors reacted positively to the news.

"Former Coach and Jimmy Choo chief executive Joshua Schulman was brought into revive the company’s fortunes last July and he is pulling the classic turnaround lever of cutting costs, including a drastic planned reduction in the firm’s headcount.

"A strategy of trying to compete with higher-end rivals hasn’t worked out so it makes sense that under Schulman the company is returning to its historic strengths in classic outerwear products like trench coats and scarves. On top of this, the company has also broadened the range of price tags on its products.

"There has also been speculation about the future of creative director Daniel Lee. Like a new football manager, Schulman may want to get his own backroom team in to support his strategy."

On the downside, Imperial Brands tumbled as its first-half adjusted operating profit missed expectations and the company announced the retirement of chief executive Stefan Bomhard, who will be succeeded by Lukas Paravicini.

Spirax was also in the red as the manufacturing group delivered a cautious outlook, saying that the uncertainty caused by trade tariffs is impacting customers' capital investment decisions.

Compass nudged lower as the catering firm held on to full-year guidance, which points to a slight slowdown in underlying revenue and profit growth, despite a strong first half.