Market Update 20/05/2025

Forex Market

USD: Moody’s Downgrade Sparks Two-Way Action

The USD swung in both directions Friday as markets reacted to a late-session credit downgrade. Moody’s cut the U.S. rating to Aa1 from Aaa, citing rising debt concerns.
While immediate reactions were muted, equities softened slightly after-hours and USD/JPY pulled back ~20 pips.

• EUR/USD hit 1.1219, dipped to 1.1131
• GBP/USD peaked at 1.3333, then dropped to 1.3251
• USD/JPY climbed to 146.08 before easing
• USD/CAD rose to 1.3995

NZD: Soft Tone into London Fix

Key Economic Data Ahead (Sydney Time)

General Market

Wall Street

U.S. equities closed higher in a broad-based rebound, overcoming late selling triggered by the Moody’s downgrade.
Support came from housing data and improved risk tone.

• Dow Jones +0.8%
• S&P 500 +0.7%
• Nasdaq +0.5%

Asia-Pacific

Chinese equities drifted lower into the weekend, but Australia outperformed.

• Hang Seng -0.4%, Shenzhen -0.4%
• Nikkei flat, ASX +0.6%

Europe

Stocks opened strong on bond buying, but gains narrowed toward the close.

• FTSE +0.6%, CAC +0.4%, DAX +0.3%
• Brent crude rebounded to $64.60

Headlines to Watch

• Fed Speak Watch: Multiple FOMC voices today (Bostic, Musalem, Hammack, Daly). All are 2025 voting members, potentially influencing rate path sentiment.
• USD Sentiment Post-Moody’s: Market focus remains on any follow-through USD softness and U.S. Treasury market moves following the downgrade.