Our monthly macro monitor steps back from the daily noise to map the forces that will shape markets through May. Three themes dominate: the pace of disinflation, the timing of the first rate cuts across major central banks, and where we are in the dollar cycle.
Disinflation, but bumpy
Headline inflation continues to ease across most developed economies, but the path is no longer a straight line. Services and shelter remain sticky, and base effects are turning less favourable. The market has learned to treat each CPI release as a binary event.
The first cuts
The ECB looks the most committed to a June move, with officials keeping the door firmly open. The Fed is more data-dependent and in no hurry, which keeps the dollar relatively supported on the rate-differential story. The Bank of England sits between the two.
The dollar cycle
We think the dollar is late-cycle rather than early in a new uptrend. Yield differentials still favour the greenback in the near term, but as other central banks catch up and US growth normalises, the medium-term bias softens. For traders, that argues for tactical rather than structural dollar longs.
What it means for positioning
Range-trading the majors around event risk remains more productive than chasing trends. Gold’s resilience reflects both rate-cut bets and persistent central-bank demand — a structural bid we expect to continue. In Africa, cooling inflation gives several central banks room to hold, supporting local currencies.
Market commentary from the EmpireFX Research Desk. For general information and education only — not investment advice. Trading forex and CFDs carries a high risk of loss. EmpireFX is licensed and regulated by the Capital Markets Authority (Kenya).