May 30th Financial News

Daily News

Summary:

High inflation may prompt earlier rate hike by the Bank of Japan (BoJ); US Appeals Court temporarily reinstates Trump-Era tariffs; Iranian FM: "Not Certain" about proximity to US Deal……

[Quick Facts]

1. High inflation may prompt earlier rate hike by BoJ

2. US Appeals Court temporarily reinstates Trump-Era tariffs

3. Iranian FM: "Not Certain" about proximity to US Deal

4. Daly: Fed determined to bring inflation down to 2% target

5. Second Court blocks Trump's Tariff policy, but only for two companies

6. Logan: Rate adjustments could take quite some time

7. Fed's Goolsbee: Rates could come down if tariffs are avoided by a deal or otherwise

[News Details]

High inflation may prompt earlier rate hike by BoJ

Tokyo's CPI data indicates a further broad-based acceleration in inflation, suggesting that the BoJ may raise interest rates even earlier than Capital Economics' current forecast of October. Capital Economics noted that core inflation (excluding fresh food) rose to a two-year high in May, while inflation excluding both fresh food and energy also climbed to a 17-month high. BoJ Governor Kazuo Ueda has warned that recent food price shocks could spill over into underlying inflation, prompting Capital Economics to predict that the central bank will soon restart its tightening cycle. However, Capital Economics confirmed that the baseline forecast of tightening would be in October, but inflationary pressures leave the door open for a rate hike as early as July.

US Appeals Court temporarily reinstates Trump-Era tariffs

On May 29th, the US Court of Appeals for the Federal Circuit granted the Trump administration's request to temporarily stay a ruling by the US Court of International Trade that had blocked the enforcement of tariffs imposed under the International Emergency Economic Powers Act. The appellate court also ordered both parties to submit written arguments on the issue of halting the tariffs, with filings due by early next month. The court will then decide on further steps.

Iranian FM: "Not Certain" about proximity to US Deal

Responding to recent media speculation that Iran and the US are close to reaching an agreement, Iranian Foreign Minister Araghchi said on the 29th, "I cannot say that it has been achieved." In a social media post, Zarif stated that Iran sincerely seeks a diplomatic solution that serves the interests of all parties. However, achieving this goal requires a comprehensive agreement that ends all sanctions and safeguards Iran's nuclear rights, including uranium enrichment. "The way to an agreement is not through the media, but through negotiations," he added.

Daly: Fed determined to bring inflation down to 2% target

San Francisco Federal Reserve President Mary Daly said on Thursday that the Fed is "determined" to bring inflation down to its 2% target and that current policy is well-positioned to achieve this. The Fed is making progress, and importantly, it remains committed to finishing the job. Meanwhile, the labor market and economic conditions remain robust. Businesses have not completely halted activity but have reduced risk-taking.

Regarding President Trump's call for Fed Chair Jerome Powell to cut interest rates, Daly said this is not the first time a president has made such a request. However, she emphasized that the Fed will continue to focus on doing what is best for the American people, as both the Fed and Congress are accountable to them.

Second Court blocks Trump's Tariff policy, but only for two companies

On May 29th, the U.S. District Court from the District of Columbia upheld a previous ruling by the U.S. Court of International Trade, blocking the Trump administration's tariff policy and ordering a 14-day suspension of its tariff order. The lawsuit was filed by two toy companies, and the court's "preliminary injunction" currently applies only to these two firms. According to the Associated Press, the Trump administration is facing at least seven lawsuits related to its tariff policies.

Logan: Rate adjustments could take quite some time

Dallas Fed President Lorie Logan stated in a speech on Thursday that tariffs could push inflation higher, at least temporarily. But if inflation expectations rise, the impact could become more persistent. While fiscal policy or regulatory changes might stimulate demand, economic uncertainty and market volatility could also lead to reduced spending by consumers and businesses, weighing on growth.

With the labor market remaining strong, inflation gradually moving back toward target, and risks to the FOMC's objectives roughly balanced, Logan believes monetary policy is in a good place. It could take quite some time to see whether the balance of risks shifts in one direction or another before the FOMC determines how interest rates should be adjusted.

Fed's Goolsbee: Rates could come down if tariffs are avoided by a deal or otherwise

Federal Reserve Bank of Chicago President Austan Goolsbee said on Thursday that they could return to a situation before April 2 (referring to the date Trump signed the so-called "reciprocal tariffs") where interest rates could come down if tariffs are avoided by a deal or otherwise. If stable full employment is achieved and inflation returns to target levels, then interest rates could be lowered to where they ultimately should be.

Goolsbee noted that until the situation becomes clearer, the threshold for taking any action is higher. The U.S. is currently facing a combination of rising prices and a cooling job market, but this does not equate to the high unemployment and high inflation "stagflation" of the 1970s. Instead, it represents a "stagflationary direction"—a situation where "inflation is rising while employment conditions are deteriorating."

[Today's Focus]

UTC+8 14:00 Germany's April Retail Sales MoM (Real)

UTC+8 16:30 Speech by ECB Governing Council Member Panetta

UTC+8 20:00 Germany's May CPI YoY

UTC+8 20:30 U.S. April PCE

UTC+8 20:30 Canada's Q1 GDP Annualized QoQ

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Gerik

Economic

Forex

Dollar’s Decline Amid Renewed Trade and Fiscal Uncertainty

The U.S. dollar continued to soften on Friday, poised to record its fifth consecutive monthly decline—a notable streak reflecting mounting investor caution. This trend unfolds against a backdrop of persistent uncertainty over trade policies and fiscal stability in major developed economies. The dollar’s volatility intensified after a federal court temporarily reinstated some of the most comprehensive tariffs introduced by former President Donald Trump, just days following a separate ruling that blocked these tariffs. Trump publicly criticized the judicial decisions and expressed hope for a Supreme Court reversal, further contributing to market unease.

Investors’ growing apprehension regarding the unpredictable trajectory of U.S. trade policy has prompted capital outflows from U.S. assets in favor of alternatives perceived as less exposed to such risks. Kyle Rodda, a senior analyst at Capital.com, characterized the latest court ruling not as a resolution but as the onset of a new wave of uncertainty, reinforcing a cautious market environment.

Economic Data and Inflation Outlook Remain in Focus

Recent U.S. economic indicators, including weekly jobless claims and growth figures, failed to alleviate fears of an impending economic slowdown. Market participants are particularly attentive to the upcoming personal consumption expenditure (PCE) inflation report—considered the Federal Reserve’s preferred inflation gauge—for potential signals on future monetary policy adjustments.

Concerns about fiscal debt levels in the United States and other advanced economies have also shaped market sentiment. Weak demand for newly issued longer-term government bonds in both the U.S. and Japan signals investor wariness regarding debt sustainability and may constrain government financing.

Currency Movements and Emerging Market Trends

On Friday, the euro showed modest strength against the dollar, trading near $1.1378, while the Swiss franc also gained, reflecting the dollar’s relative weakness. The dollar is expected to end May lower against major currencies including the euro, Swiss franc, and British pound. The U.S. Dollar Index, which tracks the greenback against a basket of six currencies, remained subdued and was set to decline 0.4% over the month.

In contrast, emerging market currencies have rallied, with a related index rising 2.2% in May—its strongest monthly performance since late 2023—suggesting renewed investor appetite for risk in these markets. The Japanese yen appreciated 0.3% to 143.73 per dollar following data showing Tokyo’s underlying inflation reached a two-year peak, which increases the likelihood of further Bank of Japan interest rate hikes. Nevertheless, the dollar is still expected to post a modest monthly gain against the yen, marking a reversal after five months of depreciation.

Looking Ahead: Trade Deadlines and Bond Yields

Market watchers remain focused on the approaching July 9 deadline for tariff reviews mandated by Trump-era policies. Any developments or potential trade agreements ahead of this date could sway currency markets and investor confidence. Meanwhile, yields on longer-dated U.S. and Japanese government bonds have slightly eased this week but remain near multi-month highs, reflecting ongoing skepticism over the fiscal outlook.

Elsewhere in the currency markets, the Australian dollar experienced a slight decline to $0.6429 but was poised to register a small gain for the month, while the New Zealand dollar traded at around $0.5973.

The persistent slide in the U.S. dollar reflects complex interplay between trade policy uncertainty, concerns about fiscal health, and shifting investor sentiment toward emerging market assets and other currencies. With critical inflation data pending and key trade deadlines approaching, the greenback’s trajectory will likely remain sensitive to developments on multiple fronts, underscoring the challenges faced by policymakers and market participants alike in navigating a volatile global economic environment.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Gerik

Economic

Context and Content of the Meeting Between Trump and Powell

Jerome Powell, Chair of the Federal Reserve, met with former President Donald Trump on Thursday at the president’s invitation, marking a significant face-to-face exchange amid months of public criticism from Trump toward the Federal Reserve’s monetary policy approach. The Federal Reserve confirmed the meeting focused on broad economic issues such as growth, employment, and inflation but emphasized that Powell did not discuss future monetary policy decisions during the encounter.

Powell reiterated that decisions regarding interest rates would be made solely based on incoming economic data and objective analysis, independent of political considerations. This statement reflects the Fed’s longstanding commitment to maintaining its independence from political influence in setting monetary policy.

Trump’s Criticism and Calls for Rate Cuts

The White House, through press secretary Karoline Leavitt, confirmed that Trump conveyed to Powell his belief that the Fed is making a mistake by not lowering interest rates. Trump argued that the current stance on rates places the U.S. economy at a disadvantage compared to China and other countries, a sentiment he has voiced publicly on multiple occasions. This meeting thus formalized a persistent pressure campaign by Trump for the Fed to adopt a more accommodative monetary policy.

This direct confrontation follows prior public tensions where Trump referred to Powell as a “fool” and accused him of lacking understanding, especially after the Fed decided in early May 2025 to hold the benchmark interest rate steady at 4.25%-4.50%. Despite his harsh rhetoric, Trump has stated he does not plan to remove Powell from his position, even though he once implied he had the authority to do so.

Powell’s Approach and Independence

Powell has maintained a consistent stance on the Fed’s independence, emphasizing that he has never requested meetings with any president and that such engagements come at the initiative of the president. His cautious approach to monetary policy reflects the complexities faced by the Fed, including the inflationary impact of trade tariffs and the potential slowdown in economic growth.

The Supreme Court recently reinforced the legal protections insulating Fed officials like Powell from arbitrary dismissal, enhancing the central bank's institutional independence. Powell’s term as Fed Chair is scheduled to expire in May 2026, with his term on the Federal Reserve Board of Governors extending through January 2028.

Political and Institutional Implications

Despite Trump’s vocal criticisms and exploration of potential replacements such as former Fed governor Kevin Warsh, there is no indication from the White House that immediate changes to Powell’s position are planned. The meeting underscores the ongoing tension between political leaders seeking aggressive monetary easing and the Fed’s mandate to pursue policies based on economic fundamentals and long-term stability.

The dialogue also highlights the delicate balance the Fed must strike in navigating political pressures while maintaining credibility in managing inflation, employment, and growth in a complex global economic environment.

Source: Yahoo Finance

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Patricia Franklin

Core inflation in Japan's capital hit 3.6% in the year to May, data showed on Friday, marking a more than two-year high in a sign persistent rises in food costs will keep the central bank under pressure to hike interest rates further.

The data highlights the dilemma the Bank of Japan (BOJ) faces in balancing mounting inflationary pressures and the hit to Japan's economy from steep U.S. tariffs.

The increase in the Tokyo core consumer price index (CPI), which excludes volatile fresh food costs, exceeded a median market forecast for a 3.5% gain and followed a 3.4% rise in April. It was the fastest annual pace of increase since January 2023, when it hit 4.3%.

A separate index that strips away the effects of both fresh food and fuel costs, closely watched by the BOJ as a broader price trend indicator, rose 3.3% in May from a year earlier after a 3.1% rise in March.

Part of the rise was due to the base effect of last year's sharp drop caused by the launch of school education subsidies and the phase-out of nationwide subsidies to curb utility bills.

But the data showed signs of sticky food inflation with non-fresh food prices up 6.9% in May from a year earlier. The price of rice soared 93.2% from year-before levels.

While uncertainty over U.S. tariffs will likely keep the BOJ on a holding pattern, the price pressure may not allow the bank to pause on rate hikes for too long, some analysts say.

BOJ Governor Kazuo Ueda said on Tuesday the central bank must be vigilant to the risk rising food prices could push up underlying inflation that is already near its 2% target.

The BOJ ended a decade-long, massive stimulus programme last year and in January raised short-term interest rates to 0.5% on the view Japan was on the cusp of durably meeting its 2% inflation target.

While the central bank has signalled readiness to raise rates further, the economic repercussions from higher U.S. tariffs forced it to cut its growth forecasts and complicated decisions around the timing of the next rate increase.

A Reuters poll, taken on May 7-13, showed most economists expect the BOJ to hold rates steady through September with a small majority forecasting a hike by year-end.

Source: Reuters

Risk Warnings and Disclaimers

Add to Favorites

Nathaniel Wright

China–U.S. Trade War

U.S. trade talks with China are "a bit stalled" and getting a deal over the finish line will likely need the direct involvement of President Donald Trump and Chinese President Xi Jinping, U.S. Treasury Secretary Scott Bessent said on Thursday.

Two weeks after breakthrough negotiations led by Bessent that resulted in a temporary truce in the trade war between the world's two biggest economies, Bessent told Fox News that progress since then has been slow, but said he expects more talks in the next few weeks.

"I believe we may at some point have a call between the president and party Chair Xi," Bessent said.

"Given the magnitude of the talks, given the complexity ... this is going to require both leaders to weigh in with each other," he said. "They have a good relationship, and I am confident that the Chinese will come to the table when President Trump makes his preferences known."

The U.S.-China agreement to dial back triple-digit tariffs for 90 days prompted a massive relief rally in global stocks. But it did nothing to address the underlying reasons for Trump's tariffs on Chinese goods, mainly longstanding U.S. complaints about China's state-dominated, export-driven economic model, leaving those issues for future talks.

Since the mid-May deal, the Trump administration has concentrated on tariff negotiations with other major trading partners, including India, Japan and the European Union. Trump last week threatened 50% tariffs on EU goods, only to delay that threat.

A U.S. trade court on Wednesday ruled that Trump overstepped his authority in imposing the bulk of his tariffs on imports from China and other countries under an emergency powers act. But less than 24 hours later, a federal appeals court reinstated the tariffs, saying it was pausing the trade court ruling to consider the government's appeal. The appeals court ordered the plaintiffs to respond by June 5 and the administration to respond by June 9.

Bessent said earlier that some trading partners, including Japan, were negotiating in good faith and that he detected no changes in their postures as a result of the trade court ruling. Bessent said he would meet with a Japanese delegation on Friday in Washington.

Source: TradingView

Risk Warnings and Disclaimers

Add to Favorites

Michelle Reid

A senior UN official on Thursday said there was little hope that the negotiations between Russia and Ukraine would produce a deal to halt fighting between the two sides.

"The massive wave of attacks over the weekend is a stark warning of how quickly this war can reach new destructive levels. Further escalation would not only aggravate the devastating toll on civilians but also endanger the already challenging peace efforts," UN Under-Secretary-General for Political Affairs Rosemary DiCarlo told the Security Council on Thursday.

"According to Ukrainian officials, with 355 drones, Monday's attack was the largest drone attack on Ukraine since the start of Russia's full-scale invasion," she said, adding: "This topped the previous record from the night before."

The UN official noted that the "cautious hope" she expressed a month ago has diminished in the face of recent developments.

"The hope that the parties will be able to sit down and negotiate is still alive, but just barely," she added.

Talks and ceasefire demands

Russia and Ukraine held a first round of direct talks in Istanbul on May 16.

But both sides failed to reach an agreement on a ceasefire.

Moscow, which said it is impossible to achieve a truce before certain conditions are met, suggested a second round of direct talks take place on Monday.

The Kremlin said Thursday that it was awaiting Kyiv's response to its proposal for holding a fresh round of talks.

Russian Foreign Minister Sergei Lavrov said this week that Moscow had drafted a memorandum outlining its terms for settling the Ukraine war.

But Ukraine said Moscow has not yet shared its proposal.

After the May 16 talks, Kyiv accused Russia of outlining unrealistic demands, including calls to cede territory that is still under Ukrainian control.

Russia launched its full-scale invasion of Ukraine in February 2022.

The war has resulted in tens of thousands of deaths and the destruction of large parts of eastern and southern Ukraine.

Russian forces have moved forward on the battlefield while pushing peace demands that include Ukraine abandoning its NATO ambitions and giving up around a fifth of its land.

Zelenskyy says Russia engaging in 'yet another deception'

Ukrainian President Volodymyr Zelenskyy on Thursday slammed Russia, saying that it was engaging in "yet another deception" by failing to hand over its peace settlement proposal ahead of a potential meeting between Moscow and Kyiv.

"Even the so-called 'memorandum' they promised and seemingly prepared for more than a week has still not been seen by anyone," Zelenskyy said in his nightly video address.

"Ukraine has not received it. Our partners have not received it. Even Turkey, which hosted the first meeting, has not received the new agenda," he added. "Despite promises to the contrary, first and foremost to the United States of America, to President (Donald) Trump: Yet another Russian deception."

Zelenskyy urged Ukraine's allies to intensify pressure on Moscow.

What did the US say?

Turkish President Recep Tayyip Erdogan told reporters that Russia's invitation for more talks had heightened Ankara's hopes for peace.

Erdogan, who is hosting the talks, has maintained good ties with both sides.

"The road to a resolution goes through more dialogue, more diplomacy. We are using all our diplomatic power and potential for peace," Erdogan's office quoted him as saying.

The United States, meanwhile, said prolonging the war was not in anyone's best interest and that its proposal for a ceasefire in Ukraine was "Russia's best possible outcome" and President Vladimir Putin should take the deal.

"We want to work with Russia, including on this peace initiative and an economic package. There is no military solution to this conflict," Acting Deputy US Ambassador John Kelley told the UN Security Council.

"The deal on offer now is Russia's best possible outcome. President Putin should take the deal," he added.

"If Russia makes the wrong decision to continue this catastrophic war, the United States will have to consider stepping back from our negotiation efforts to end this conflict," Kelley stressed. "Additional sanctions on Russia are still on the table."

Source: DW

Risk Warnings and Disclaimers

Add to Favorites

LinoCapital

Federal Reserve Bank of Dallas President Lorie Logan signaled it may take a while before officials know how the economy will respond to tariffs and other policy changes and thus how they should adjust interest rates.

In prepared remarks for an event in Waco, Texas on Thursday, Logan outlined a variety of risks to the economic outlook.

Tariffs could drive up price growth — temporarily or more persistently should inflation expectations rise. Fiscal policy or regulatory changes could boost demand, but economic uncertainty and market volatility may also cause a pullback among consumers and businesses, weighing on growth.

“For now, with the labor market holding strong, inflation trending gradually back to target, and risks to the FOMC’s objectives roughly balanced, I believe monetary policy is in a good place,” Logan said, referring to the interest-rate setting Federal Open Market Committee.

“It could take quite some time to know whether the balance of risks is shifting in one direction or another,” she added.

The Fed has left interest rates unchanged at each of its three meetings so far this year and is expected to do so again when officials gather in June. Minutes from policymakers’ May 6-7 meeting showed officials broadly agreed that heightened economic uncertainty meant they should remain patient in adjusting borrowing costs.

Last month, when the Trump administration had initially announced higher-than-expected tariffs on US trade partners, Logan said they would likely drive up prices and unemployment. Many tariffs have been paused or temporarily reduced as the administration negotiates deals with countries.

The latest de-escalation between the US and China has renewed optimism among consumers, with confidence rebounding this month after dropping to nearly a five-year low in April, according to data released earlier this week. At the same time, continuing claims for unemployment insurance benefits have climbed to the highest level since 2021, increasing concern that the unemployment rate may rise.

Fed officials have expressed concern that tariffs may put them in the tough spot of having to choose between keeping rates high to cool renewed inflationary pressures or lowering them to bolster a flagging economy.

Logan emphasized on Thursday that the economic outlook is hard to forecast right now. She also sounded a warning on the effects of higher inflation expectations.

“If expectations of higher inflation became entrenched, inflationary pressures could persist and become very costly to reverse,” she said.

Logan also spoke about central bank independence, a topic that has resurfaced recently with Trump’s repeated pressure on the Fed and Chair Jerome Powell to lower rates.

“Research shows that central banks perform better on inflation when they are independent from short-term political considerations,” Logan said. “The pattern is clear around the world and over history.”