Insights

The US dollar traded lower in May due to data indicating a faster-than-expected cooling of the labor market and a continued decline in inflation.

Expectation that the Federal Reserve might still consider a rate cut this year, combined with escalating geopolitical tensions in the Middle East, propelled gold to a new record high on May 20th, though it retreated afterward following Fed officials’ ‘higher for longer’ statements. The Japanese yen had the most significant losses, remaining under pressure despite suspected intervention at the beginning of the month.

The economic contraction in Q1 may complicate the Bank of Japan’s plans to raise rates soon. The primary beneficiaries were the risk-sensitive kiwi and aussie, respectively, followed by the pound, as improved UK economic activity and hotter-than-expected April inflation data led investors to reassess their Bank of England rate cut expectations.

The IXI Fund experienced moderate activity throughout May, with daily contributions fluctuating between slightly positive and negative figures. Early in the month, the Bank of Japan’s intervention provided a slight boost to the Fund’s performance, although the impact was limited due to the strategy’s weak signal in a relatively non-volatile period. Despite these conditions, the Fund managed to close the month on a positive note.