Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie, Chinese yuan hit on trade announcement
Global markets shuddered this morning after US president Donald Trump announced the long-awaited next stage of his trade program with a blanket tariff of 10% on all imports into the US.
In addition to the 10% minimum on all countries, Trump announced a series of other tariffs that reflect the restriction on US imports into other countries.
China will see an additional 34% tariff while Japan sees an additional 24% tariff. Australian imports will see the minimum 10% tariff imposed.
US sharemarket futures tumbled on the news. The S&P 500 fell 3.4% while the Nasdaq lost 4.3%.
In FX markets, trade sensitive currencies fell, with the AUD/USD down 0.9% as it reached one-month lows. The NZD/USD fell 0.7%.
In Asia, USD/CNH jumped 0.6% to near the year’s highs. USD/SGD hit one-month highs.
GBP/USD eyes rebound amid slower UK wage growth
UK wage growth is slowing, with median pay increases dropping to a three-year low at 3.5% in February, down from 4.0% previously.
This supports the Bank of England’s cautious approach to monetary policy, especially as private sector pay is expected to slow further by year-end.
GBP/USD is near four-month highs, while GBP/SGD is near eight-month highs. GBP/AUD however, is near five-year highs.
GBP/USD has followed a corrective decline from 1.2925, still above its 50-day EMA of 1.2770.
Key support levels lie at 1.2790–1.2860, where a rebound could pave the way for further upside, potentially forming a positive inverted head-and-shoulders pattern.
A sustained move above 1.3049 could open the door to 1.3264, while a break below 1.2790 risks further declines toward support at 1.2456.
EUR/USD poised for positive breakout as ECB eyes policy shift
The European Central Bank (ECB) may consider cutting rates in April if inflation data aligns with its 2% target, according to Governing Council Member Rehn.
Both AUD/EUR and NZD/EUR are near eight-month lows.
Looking at EUR/USD, the pair has rebounded from its recent corrective decline, still above its 50-day EMA at 1.0666
A close above 1.0955 would confirm this pattern, potentially opening the way for a significant move toward 1.1697.
However, if EUR/USD fails to hold above 1.0630, it risks further downside toward support near 1.0387.
USD jumps on tariff announcement
Table: seven-day rolling currency trends and trading ranges
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
April is shaping up to be a pivotal month, with inflation data, labor market signals, and growth indicators shaping central bank expectations. Markets will be monitoring for shifts in policy guidance, particularly from the US Federal Reserve and European Central Bank, which will drive risk sentiment heading into the summer months.
Download our Global FX Outlook for April to help ensure your business is prepared for potential market shifts and their impact on your currency exposures.
Currency moves in March
The US dollar fell to five-month lows last month, pressed by a slowdown in key US data, reaching levels last seen before President Trump’s election victory. Across the Atlantic, the euro was one of the largest beneficiaries with the EUR/USD up 4.4% in the first week of March before easing as the month progressed.
The British pound was another winner helped by a reluctance to cut interest rates from the Bank of England, which saw the GBP/USD touch 1.3000 – the highest level since November. Down under, the Australian dollar remains broadly stuck in a two-cent range hampered by worries about the Chinese economy and, unsurprisingly, trade issues.
Key market themes to watch
The historic German debt announcement may have just marked the bottom of the economic cycle in Europe. However, Germany is finally addressing the structural weaknesses that have interfered with growth and if executed effectively, this could drive productivity, investment and a shift in the broader European economic outlook.
Meanwhile the USD posted its worst month in over a year with a drawdown of 3.2% in March. While the currency’s fall is primarily market-driven, history suggests that Trump’s favorability ratings tend to follow a similar trajectory. A strong dollar has often coincided with confidence in his economic policies, while weakness signals investor skepticism.
Uncertainty surrounding tariff policy and fears of an economic slowdown have kept US equity markets in drawdown territory, with the S&P 500 down around 7% from its recent peak. But comments from President Trump on his tariff plans and flash PMI data called into question these fears, helping stocks rebound and the dollar rise across the board. Where is the US economy in the business cycle? This is a question without a definite answer…for now.
FX market insights: A delicate balance
As we enter April, markets will be navigating a delicate balance between inflation concerns, growth trajectories, and central bank policy decisions. The month will be packed with inflation releases from the US, Eurozone, Germany, and China, making price pressures a central theme. US CPI (April 10) and PCE prices (April 30) will be crucial in determining the Fed’s policy stance. If inflation proves sticky, rate-cut expectations could get pushed further out.
April also features several key central bank rate decisions, which raise questions about any potential cuts on the horizon. The Fed’s March meeting minutes (released on April 10) will offer insight into inflation concerns and whether policymakers are aligned with Powell’s cautious stance on cuts, while the European Central Bank and Bank of Canada will announce rate decisions mid-month. Any hints at rate cuts could boost risk appetite.
April is set to be a month of pivotal shifts and opportunities in the global FX landscape. With inflation data, central bank decisions, and market sentiment all in play, staying informed is crucial. Download the Global FX Outlook for April to navigate these complexities and position your business for success amidst this evolving foreign exchange landscape.
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.
Considering that tariffs currently in place include 25% on steel and aluminum, 25% on non-CUSMA/USMCA-compliant goods, 10% on Canadian energy, 20% on Chinese imports—and a 25% tariff on autos expected to take effect tomorrow—much of the tariff story appears to be priced into the foreign exchange (FX) markets. Interestingly, the muted reaction in FX over recent weeks might suggest that markets do not anticipate these tariffs to persist long-term. The Canadian dollar, often regarded as a gauge of U.S. trade policy uncertainty, has traded within a narrow range and remains virtually unchanged year-to-date. Could it be that FX markets are mispricing today’s event?
One perspective is that the limited market reaction may stem from optimism that reciprocal tariffs could be eased relatively fast through diplomatic efforts, with the expectation that these tariffs will be reciprocally reduced once agreements are reached. However, President Trump’s insistence on the permanence of auto tariffs poses a direct threat to Ontario’s manufacturing sector—one of the pillars of the Canadian economy. The greatest risk for the Loonie lies in a prolonged trade war, making it challenging to determine whether tariffs are fully priced into current valuations. Should tariffs persist at or above 25% across the board, the USD/CAD could weaken, testing levels around 1.45 against the U.S. dollar. Conversely, a lower tariff rate, or tariffs contained to specific sectors, might see the CAD strengthen to test the 1.42 level.
On April 2nd, markets will focus on the size of the tariffs and their geographical and sectoral distribution. Post April 2nd, attention will shift to how countries respond—whether through retaliation, diplomatic efforts, or other measures. Markets will also observe how willing the U.S. administration is to use reciprocal tariffs as leverage to secure long-term trade agreements or economic interests that align with U.S. priorities. For Canada, the timing is problematic, as President Trump has indicated he won’t engage in negotiations until Canadians have elected their new Prime Minister on April 28th. This uncertainty casts a shadow over the Loonie’s outlook, with this week’s macro reports overshadowed by developments in U.S. trade policy.
So far, markets have responded to the uncertainty with caution, with equities being the most sensitive to the news. The VIX, a key volatility indicator, has surged 24% year-to-date, reflecting heightened investor anxiety. Gold has climbed 18% year-to-date, maintaining its status as a safe-haven asset. The fly-to-quality has also had an effect on the Nasdaq and Bitcoin, which have declined around 10% year-to-date.
Historically, April has been the weakest month for the US dollar, with an average negative return of -0.5% over the past 20 years. However, the short-term bullish perception of tariffs may overshadow this seasonal pattern, as the escalating trade wars could significantly influence the dollar’s trajectory on “Liberation Day”, and set the tone for Q2.
Does an awful April await the dollar?
George Vessey – Lead FX & Macro Strategist
Over the last 20 years, April has been the US dollar’s worst month of the year, averaging a negative return of -0.5%. Though seasonality trends will play second fiddle to trade wars, the broader economic and geopolitical landscape doesn’t bode well for the buck either.
The world waits on tenterhooks ahead of the White House’s announcement on a new set of tariffs on imported goods, which have the potential to reshape global trade and disrupt economic activity. The“blurred visibility’’ approach from Trump on tariffs brings a huge amount of unpredictability – and as a result, it’s difficult for companies to plan ahead with spending and hiring decisions. If the haphazard manner in which the White House has imposed its levies continues, it would likely aggravate the situation and potentially impede economic activity. Indeed, yesterday’s data offered a mix of weaker activity data, cooling labour market signals and surging price pressures.
The ISM manufacturing PMI fell to 49 in March from 50.3 previously, below forecasts of 49.5. The reading pointed to the first contraction in factory activity in three months. The details were also ugly. New orders, employment and production all contracted too, whilst price pressures soared to the highest since June 2022. All this suggests that tariff fears are hurting the US manufacturing sector and consistent with early stages of stagflation. This is negative for risk assets.
Nervous investors are hoping for more clarity on tariff policy, but there’s a chance that uncertainty extends beyond today, which is likely why FX traders are in a wait-and-see mode. Currency markets have been relatively calm over the past few days and implied volatility gauges somewhat subdued in light of circumstances. We think an escalating tariff narrative could provide dollar respite early on due to global risk aversion boosting safe haven flows, but rising US growth scares will come back to haunt the buck. A downtrend would also correlate with the dollar’s path during Trump’s first term. Back then, the dollar index depreciated around 15% from peak to trough during 2017-2018.
What we do know is that the Trump administration is aiming for a challenging trifecta: a weaker USD, lower yields, and a robust stock market. Historically, achieving this rare combination requires highly disinflationary policies to push yields and the USD lower, alongside a supportive Federal Reserve to bolster equity market sentiment. However, the current policy mix – marked by geopolitical shifts, tariffs, and macroeconomic uncertainty – may succeed in weakening the USD and lowering yields, but risks undermining economic growth and stock market performance in the process. This delicate balance highlights the complexities of navigating such ambitious goals without triggering broader financial instability.
Betting on euro strength despite tariff threat
George Vessey – Lead FX & Macro Strategist
European risk assets have been performing relatively well since Trump’s election, with EUR/USD up around 4% and the Euro Stoxx 50 up 8%. The German equity benchmark is up a whopping 13% – turbocharged by the historic German fiscal package. In the run-up to Trump’s announcement today, sentiment has turned more pessimistic though and the European Union said it’s ready to retaliate if necessary if reciprocal tariffs are imposed.
Tariffs risk reigniting inflationary pressures in the short term. Longer-term though, a trade war may weaken growth, turning into a disinflationary force for Germany and the eurozone. Germany’s 10-year Bund yield has fallen to a four-week low below 2.7%, reflecting investor caution amid escalating tensions. Money markets currently price an 77% chance of an ECB rate cut in April, but policymakers remain divided. More policy easing could weigh on the euro via falling relative yield spreads, but given the huge fiscal stimulus plans, the impact on growth and therefore need for aggressive monetary easing may be constrained.
This could be why FX options traders are still more optimistic on the euro’s outlook further down the line. So-called risk reversals, a closely watched barometer of positioning, show investors are the most bullish on the euro over the next month since late 2020. That’s despite the fact the common currency is already enjoying its best start to a year since 2016 and also suggests markets are wagering that a trade war will be more detrimental to the US than Europe.
Sterling looks sturdy
George Vessey – Lead FX & Macro Strategist
In contrast to the US dollar, seasonality plays in sterling’s favour. The pound has delivered the best average monthly returns versus the dollar in the past 20 years in April, and this is thanks in part to UK fiscal year-end flows and portfolio rebalancing. GBP/USD has consolidated around the $1.29 handle for the past four weeks, with no reversal signal identified on the charts yet. As long as the pair holds above the 200-day moving average (currently around $1.28), the path of least resistance should remain to the topside. The pair is up 7% from year-to-date lows of $1.21 and less than 4% away from its 2024 high.
As the pound starts April with support from favourable rate differentials and optimism around seasonality trends, there are doubts emerging that the UK will sidestep the worst of Trump’s looming tariff barrage. The Trump administration has not confirmed which countries will be hit, although it has trailed today’s announcement as a sweeping one. This has somewhat dashed hopes that the UK might float under the radar, though negotiating some sort of deal remains plausible, especially thanks to relatively modest bilateral trade with the US.
For this reason, sterling is being dubbed a tariff hedge of sorts. If Trump’s tariff plans roil global markets, sterling won’t be immune, but it seems to have a few supports that can act as a shield. In a full-blown risk-off move, the dollar tends to dominate, but any rebound in the safe haven could be short-lived if the focus shifts back to US recession fears.
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
As the second largest sender of international students behind China, India is a highly regulated financial services market. As of April 1st, 2025, the Tax Collection at Source (TCS) rules introduced under India’s Finance Act 2020 have changed, with the government increasing the TCS exemption limit from ₹7 lakh up to ₹10 lakh.
To help our Indian payment partners ensure full compliance with this these changes, we’ve updated our overview of the TCS regulations, originally posted in 2023.
What is Tax Collected at Source?
Tax Collected at Source came into effect across India on 1st October 2020. As of April 1st 2025, It is payable on cumulative remittances in excess of 10 lakh Indian Rupee (₹10 lakh) per remitter from India within a financial year on cross-border transactions that fall under the Liberalized Remittance Scheme. Education payments fall under the Liberalized Remittance Scheme so are therefore subject to the new TCS tax. At the end of the Indian financial year, TCS can be rebated as part of the payer’s tax return or be used to offset any outstanding taxes owed.
How is TCS applied?
To complete an income tax return in India, an individual requires a Permanent Account Number (PAN) which is issued as a laminated card. When a payer in India initiates a cross-border transaction through an Authorized Dealer (authorized by the Reserve Bank of India to deal in foreign exchange), such as a bank or payment provider, the payer’s PAN card is checked to confirm the cumulative cross-border remittance value that has been sent for the financial year.
If the remitter has not exceeded the INR ₹10 lakh limit, they do not have to pay the TCS
If the remitter has exceeded the limit or will exceed the limit, they must pay TCS on the remitted amount above the INR 10 lakh limit
For education payments, there are two applicable TCS rates which apply to the remitted amount above the INR 10 lakh threshold:
Nil if the cross-border payment is funded through an Indian bank loan
5% if the cross-border payment is self-funded (private)
How is this tax collected?
How is this tax collected?
It is the responsibility of the Authorized Dealer in India facilitating the cross-border transaction to remit the tax on behalf of the payer to the tax authority. So, if a student from India makes a payment to your institution, this would be handled by the bank or the Indian payment provider the student uses to transfer their funds.
How is this tax managed if a student from India uses the Convera platform?
We have worked with all our payment partners in India to help ensure these new tax obligations are being met.
ICICI Bank
Collection of TCS is managed by branch staff at ICICI. They will do a PAN look up and ask for a loan sanction letter and then apply TCS, if applicable, when the student visits their local ICICI branch. ICICI will remit the tax to the appropriate authorities.
Convera Agent
Collection of TCS is managed by branch staff at the Convera Agent location. They will do a PAN look up and ask for a loan sanction letter and then apply TCS if applicable. Each Agent will remit the tax to the appropriate authorities.
Domestic payment into our INR bank account
GlobalPay for Students will calculate the TCS amount and add such amount to the amount due. This will be displayed on the student’s payment instructions. The payer must remit the full amount (amount owed to your Institution and TCS). Our banking partner in India will withhold the amount of TCS payable and remit those funds to the tax authority and your institution will receive the full amount owed.
What does my institution need to do?
There is no action for you to take when receiving payments sent through GlobalPay for Students. Our payment partners in India will manage this process for your students, and there is no need to change your billing amounts. If you work with other payment providers, you should check with them on their processes.
What if a student sends a payment direct into our institution’s bank account?
We always advise our education institution partners not to accept or encourage payments by overseas students direct into their bank account. There are several reasons for this:
Reconciling and matching these payments to the student account creates additional work for your team
Any delay posting to the student account will impact on student experience
Publishing or sharing your bank details could expose your institution to fraud
Payments coming into your account will lack compliance screening (payment providers such as Convera do this for you)
If a student from India does send a payment direct into your bank account from India, the bank in India will also manage the TCS and remittance to the tax authorities.
Work with a trusted partner
When receiving payments from countries around the world, ensure you are working with a provider that has a global network and strong payment partner relationships. This ensures regulations and processes such as TCS in India are managed on your behalf, minimizing interruption to your cashflow and providing students with a stress-free payment process.
Convera is your trusted partner delivering:
Mobile enabled solution enabling your international students to pay their fees in their local currency quickly and easily online, by bank transfer or by credit card.
Seamless payment experience for your students and easy reconciliation for your institution.
60+ bank relationships and 500+ bank accounts.
~200 regulatory licenses.
Dedicated regional teams focused on local compliance requirements.
Disclaimer:
Convera has based the opinions expressed in this webpage on information generally available to the public, and such information or opinions are strictly for illustrative purposes only. Business between you and Convera shall be governed by the applicable terms and conditions provided to you before you undertake any transaction or commercial relationship with Convera.
US President Trump will unveil sweeping tariffs against US trading partners today. It isn’t a binary event though, a range of tariff policies could be announced, and the repercussions could prove hard to predict long after. Trump expects to bring “liberation” for the US economy, but amidst the spike in trade policy uncertainty, signs of slower growth, upward pressure on inflation and souring risk sentiment dominate. The 4% drop in US equities and the US dollar this year point to a more pessimistic outlook.
Does an awful April await the dollar?
George Vessey – Lead FX & Macro Strategist
Over the last 20 years, April has been the US dollar’s worst month of the year, averaging a negative return of -0.5%. Though seasonality trends will play second fiddle to trade wars, the broader economic and geopolitical landscape doesn’t bode well for the buck either.
The world waits on tenterhooks ahead of the White House’s announcement on a new set of tariffs on imported goods, which have the potential to reshape global trade and disrupt economic activity. The “blurred visibility’’ approach from Trump on tariffs brings a huge amount of unpredictability – and as a result, it’s difficult for companies to plan ahead with spending and hiring decisions. If the haphazard manner in which the White House has imposed its levies continues, it would likely aggravate the situation and potentially impede economic activity. Indeed, yesterday’s data offered a mix of weaker activity data, cooling labour market signals and surging price pressures.
The ISM manufacturing PMI fell to 49 in March from 50.3 previously, below forecasts of 49.5. The reading pointed to the first contraction in factory activity in three months. The details were also ugly. New orders, employment and production all contracted too, whilst price pressures soared to the highest since June 2022. All this suggests that tariff fears are hurting the US manufacturing sector and consistent with early stages of stagflation. This is negative for risk assets.
Nervous investors are hoping for more clarity on tariff policy, but there’s a chance that uncertainty extends beyond today, which is likely why FX traders are in a wait-and-see mode. Currency markets have been relatively calm over the past few days and implied volatility gauges somewhat subdued in light of circumstances. We think an escalating tariff narrative could provide dollar respite early on due to global risk aversion boosting safe haven flows, but rising US growth scares will come back to haunt the buck. A downtrend would also correlate with the dollar’s path during Trump’s first term. Back then, the dollar index depreciated around 15% from peak to trough during 2017-2018.
What we do know is that the Trump administration is aiming for a challenging trifecta: a weaker USD, lower yields, and a robust stock market. Historically, achieving this rare combination requires highly disinflationary policies to push yields and the USD lower, alongside a supportive Federal Reserve to bolster equity market sentiment. However, the current policy mix – marked by geopolitical shifts, tariffs, and macroeconomic uncertainty – may succeed in weakening the USD and lowering yields, but risks undermining economic growth and stock market performance in the process. This delicate balance highlights the complexities of navigating such ambitious goals without triggering broader financial instability.
Betting on euro strength despite tariff threat
George Vessey – Lead FX & Macro Strategist
European risk assets have been performing relatively well since Trump’s election, with EUR/USD up around 4% and the Euro Stoxx 50 up 8%. The German equity benchmark is up a whopping 13% – turbocharged by the historic German fiscal package. In the run-up to Trump’s announcement today, sentiment has turned more pessimistic though and the European Union said it’s ready to retaliate if necessary if reciprocal tariffs are imposed.
Tariffs risk reigniting inflationary pressures in the short term. Longer-term though, a trade war may weaken growth, turning into a disinflationary force for Germany and the eurozone. Germany’s 10-year Bund yield has fallen to a four-week low below 2.7%, reflecting investor caution amid escalating tensions. Money markets currently price an 77% chance of an ECB rate cut in April, but policymakers remain divided. More policy easing could weigh on the euro via falling relative yield spreads, but given the huge fiscal stimulus plans, the impact on growth and therefore need for aggressive monetary easing may be constrained.
This could be why FX options traders are still more optimistic on the euro’s outlook further down the line. So-called risk reversals, a closely watched barometer of positioning, show investors are the most bullish on the euro over the next month since late 2020. That’s despite the fact the common currency is already enjoying its best start to a year since 2016 and also suggests markets are wagering that a trade war will be more detrimental to the US than Europe.
Sterling looks sturdy
George Vessey – Lead FX & Macro Strategist
In contrast to the US dollar, seasonality plays in sterling’s favour. The pound has delivered the best average monthly returns versus the dollar in the past 20 years in April, and this is thanks in part to UK fiscal year-end flows and portfolio rebalancing. GBP/USD has consolidated around the $1.29 handle for the past four weeks, with no reversal signal identified on the charts yet. As long as the pair holds above the 200-day moving average (currently around $1.28), the path of least resistance should remain to the topside. The pair is up 7% from year-to-date lows of $1.21 and less than 4% away from its 2024 high.
As the pound starts April with support from favourable rate differentials and optimism around seasonality trends, there are doubts emerging that the UK will sidestep the worst of Trump’s looming tariff barrage. The Trump administration has not confirmed which countries will be hit, although it has trailed today’s announcement as a sweeping one. This has somewhat dashed hopes that the UK might float under the radar, though negotiating some sort of deal remains plausible, especially thanks to relatively modest bilateral trade with the US.
For this reason, sterling is being dubbed a tariff hedge of sorts. If Trump’s tariff plans roil global markets, sterling won’t be immune, but it seems to have a few supports that can act as a shield. In a full-blown risk-off move, the dollar tends to dominate, but any rebound in the safe haven could be short-lived if the focus shifts back to US recession fears.
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Markets inch higher ahead of US tariff announcement
Global markets edged higher overnight ahead of what is likely to be a massive 24 hours with US president Donald Trump planning to announce a new wave of tariffs overnight.
President Trump has marked 2 April as the key date for an announcement around reciprocal tariffs. Of course, the announcement, due Thursday morning APAC time, might be delayed, shifted or more positive than expected.
In recent days, media reports have suggested the focus will be on a country-by-country basis with tariffs of at least 20% reported overnight.
While equity markets and risk-sensitive currencies like the Australian dollar have been mostly weaker over the last fortnight, we saw a small rebound overnight, led by a 0.4% gain in the US’s S&P 500.
The AUD/USD gained 0.6% as it climbed from one-month lows while NZD/USD gained 0.5% as it also rebounded from one-month lows. In Asia, the USD mostly gained, with the USD/SGD up 0.1% and USD/CNH up 0.3%.
RBA holds steady, citing inflation uncertainty
No joy for Australian mortgage holders yesterday, with the Reserve Bank of Australia maintaining the cash rate at 4.10% on Tuesday as expected.
The central bank highlighted that labour markets remain tight despite February’s job losses. It also pointed to heightened global uncertainty, noting that US tariffs are affecting confidence—an impact that could intensify if tariffs expand or other countries retaliate.
The RBA stated that inflation could move in either direction.
AUD/USD reaction was muted after the RBA’s decision and press conference but the AUD/USD ended higher on the day in line with gains in global markets.
That said, the AUD/USD, AUD/CNY, AUD/EUR are all near the lower end of their 30-day trading range, signaling ongoing selling pressure in these markets.
For AUD/NZD, it is in the middle of the 30-day trading range, but AUD buyers may also look to capitalize on the pair.
Japanese yen higher as Tankan Survey indicates May BoJ live
Looking to Japan, the Tankan manufacturing index in Q1 was 12 compared to 14 before, while the non-manufacturing index was 35 compared to 33 previously.
While activity slowed, the results of the survey indicate a higher inflation expectation for all company categories, which supports the argument that the May BoJ will be live.
JPY has strengthened against USD circa 5% YTD, and it is the top three performing G10 FX YTD.
USD remains supported as Fed maintains “moderately restrictive” stance, with FOMC members emphasizing caution on rate cuts due to upside inflation risks.
Looking forward, USD/JPY may look to breach next resistance levels of 50-day EMA of 150.78 and 200-day EMA of 151.44.
Similarly for SGD/JPY, a move higher could potentially breach the next resistance levels of 50-day EMA of 112.42 and 200-day EMA of 113.05.
USD higher in Asia ahead of “Liberation Day”
Table: seven-day rolling currency trends and trading ranges
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Uncertainty likely to persist beyond Liberation Day
George Vessey – Lead FX & Macro Strategist
Global markets extended their decline on Monday as trade war concerns continued to dampen investor sentiment, while safe haven Gold saw another strong rally, with prices continuing their run to record highs. The US dollar index ended the month 3% lower, its worst month since November 2022, but started the week on the front foot thanks to some defensive positioning. With so-called “Liberation Day” looming, uncertainty is high, and the range of possible outcomes is wide, with the administration considering various factors, including tariff rates, non-tariff measures, and value-added taxes, which could affect the final outcome.
The US administration’s chaotic approach to economic and trade policy seems to be weighing more heavily on its domestic consumers and businesses relative to peers. This is evidenced by recent US survey data with uncertainty on main street near record highs and consumer confidence at multi-year lows as respondents remain hesitant about economic conditions amid ongoing policy developments. With inflation still stuck above the Fed’s 2% target, and uncertainty around how much tariffs may fuel a rise in prices for consumers and businesses, the central bank has so far in 2025 maintained its benchmark rate at the current level of 4.25% to 4.5%. While the reciprocal tariff announcement tomorrow should provide some incremental clarity on the countries and products impacted and the rates of the levies, these will likely be subject to continued negotiation.
As such, scope for a sustained rebound in risk appetite and therefore risky assets, like equities and pro-cyclical or commodity-linked currencies, appears limited in our view. If trade frictions worsen, a recession is a realistic risk across major economies. This is why hard economic data remains integral too, with eyes on US ISM manufacturing PMI and JOLTS job openings today.
Euro held back by softer inflation
George Vessey – Lead FX & Macro Strategist
The euro stabilised around the $1.08 level at the start this week as investors assessed key inflation data while bracing for reciprocal US tariffs set to take effect on Wednesday. Expected volatility in EUR/USD remains subdued, reflecting trader complacency, with one-week swings estimated within 1.3% – a far cry from recent 1-week ranges. The currency pair staged a 1-week rise of 4.4% earlier this month – its second biggest rise since 2009.
On the data front, inflation for March brought some relief for the European Central Bank (ECB) yesterday. German headline inflation eased to 2.2% y/y – a 2-year low, while core inflation dipped to 2.5% from 2.6%. Germany’s import prices did surge 3.65% though, the highest since January 2023, while retail sales rose 0.8% m/m, marking the biggest increase in five months. Despite this resilience, Germany’s 10-year Bund yield fell to a four-week low as global borrowing costs declined amid escalating trade war fears. Still, the spread between US 10-year Treasury yields and German Bunds has narrowed by the sharpest margin since 2008 (excluding pandemic-related moves). This has coincided with the over 4% rise in EUR/USD this quarter – the strongest Q1 since 2016.
This mostly reflects Germany’s fiscal stimulus package, which aims to support growth. It also reflects the growing concern over inflation risks, potentially keeping ECB rate cutting at bay. But while trade tensions could temporarily lift inflation, a prolonged trade war might weaken growth, turning into a disinflationary force.
For now, euro traders remain on edge because if the US does opt for high tariffs on all EU products this week, EUR/USD could be driven back towards the 200-day moving average nearer $1.07. Conversely, there is a chance traders view this as riskier to the US economic outlook, in which case EUR/USD could move back above $1.09
Lacking directional conviction
George Vessey – Lead FX & Macro Strategist
The British pound edged higher against the euro and slightly lower against the dollar on Monday, though the latter clocked its best month since November 2023. Nervousness about the scale and timeline of Trump’s proposed tariffs keeps direction relatively random, confirming a lack of conviction as to how the currency market should react to the announcements on Wednesday.
With focus on April seasonality and bets the UK economy may prove to be relatively shielded from US tariff announcements this week, the pound looks to be in a more favourable position relative to its peers. Because the UK is perceived to be relatively at little risk to US tariffs relative to major peers, sterling has at times found itself well supported around tariff announcements. Indeed, GBP/EUR has recorded three consecutive weekly advances against the euro, although upside momentum is far from strong and the pair is prone to mean reversion around €1.19. Plus, given the elevated focus on tariffs, anything short of immediate implementation could drive some relief for the euro in the short term.
On the data front, the Lloyds business optimism index was published yesterday. This is a strong leading indicator of economic activity in the UK and has rebounded back to levels seen only a handful of times since 2017. Final PMI figures for March are due this week, but will play second fiddle to the tariff chatter.
Oil and gold near recent highs
Table: 7-day currency trends and trading ranges
Key global risk events
Calendar: March 31- April 4
All times are in BST
Have a question?[email protected] *The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates
The U.S. administration recently imposed a 25% tariff on auto imports, effective April 3, aiming to make it permanent. These tariffs directly impact five key trading partners—Mexico, Japan, South Korea, Canada, and Germany—with Canada standing out as one of the most affected. Ontario, responsible for 85% of Canada’s auto and parts industry, will bear the brunt of this policy. In 2024 alone, the U.S. imported $31.2 billion worth of vehicles and parts from Canada. Major industry players—Ford, GM, Stellantis, Honda, and Toyota—assemble over 1.4 million light vehicles in Canada each year, alongside 460,000 passenger vehicles and 23,000 heavy trucks.
The tariffs are designed to incentivize domestic production, and some foreign automakers, like Hyundai, have committed significant investments, such as $21 billion in U.S. operations between 2025 and 2028. However, the auto industry’s global supply chain presents significant challenges. North America’s interdependent trade network—established through agreements like the 1965 Auto Pact and later reinforced by NAFTA and the USMCA—relies on cross-border cost efficiencies. These agreements have historically been celebrated as milestones in fostering trade cooperation and industry growth.
Achieving fully domestic manufacturing remains a distant goal due to supply chain complexities. Even the Ford F-150, often touted as the “most American” car, saw the U.S. and Canadian share of its value drop from 75% in 2012 to 45% by 2024. U.S. automakers depend heavily on imported components, and while partial exemptions for Canada and Mexico exist, they only apply to parts significantly transformed within the U.S. This leaves manufacturers vulnerable to escalating production costs.
Canada’s counter-tariff list, worth C$155 billion, notably excludes auto-related goods, highlighting the Canadian government’s acknowledgment of the potential damage auto tariffs could inflict on North America’s tightly integrated production network.
As the tariff debate reaches its peak this Wednesday, market uncertainty remains high. Businesses, consumers, and investors are unlikely to receive the policy clarity they seek in the near term. President Trump has mentioned the possibility of negotiating reciprocal tariffs, but he also emphasized the administration’s long-term commitment to sector-specific tariffs, including those on autos.
Uncertainty likely to persist beyond Liberation Day
George Vessey – Lead FX & Macro Strategist
Global markets extended their decline on Monday as trade war concerns continued to dampen investor sentiment, while safe haven Gold saw another strong rally, with prices continuing their run to record highs. The US dollar index ended the month 3% lower, its worst month since November 2022, but started the week on the front foot thanks to some defensive positioning. With so-called “Liberation Day” looming, uncertainty is high, and the range of possible outcomes is wide, with the administration considering various factors, including tariff rates, non-tariff measures, and value-added taxes, which could affect the final outcome.
The US administration’s chaotic approach to economic and trade policy seems to be weighing more heavily on its domestic consumers and businesses relative to peers. This is evidenced by recent US survey data with uncertainty on main street near record highs and consumer confidence at multi-year lows as respondents remain hesitant about economic conditions amid ongoing policy developments. With inflation still stuck above the Fed’s 2% target, and uncertainty around how much tariffs may fuel a rise in prices for consumers and businesses, the central bank has so far in 2025 maintained its benchmark rate at the current level of 4.25% to 4.5%. While the reciprocal tariff announcement tomorrow should provide some incremental clarity on the countries and products impacted and the rates of the levies, these will likely be subject to continued negotiation.
As such, scope for a sustained rebound in risk appetite and therefore risky assets, like equities and pro-cyclical or commodity-linked currencies, appears limited in our view. If trade frictions worsen, a recession is a realistic risk across major economies. This is why hard economic data remains integral too, with eyes on US ISM manufacturing PMI and JOLTS job openings today.
Euro held back by softer inflation
George Vessey – Lead FX & Macro Strategist
The euro stabilised around the $1.08 level at the start this week as investors assessed key inflation data while bracing for reciprocal US tariffs set to take effect on Wednesday. Expected volatility in EUR/USD remains subdued, reflecting trader complacency, with one-week swings estimated within 1.3% – a far cry from recent 1-week ranges. The currency pair staged a 1-week rise of 4.4% earlier this month – its second biggest rise since 2009.
On the data front, inflation for March brought some relief for the European Central Bank (ECB) yesterday. German headline inflation eased to 2.2% y/y – a 2-year low, while core inflation dipped to 2.5% from 2.6%. Across the eurozone, inflation also fell sharply to 2.3% from 2.8% in February. Germany’s import prices did surge 3.65% though, the highest since January 2023, while retail sales rose 0.8% m/m, marking the biggest increase in five months. Despite this resilience, Germany’s 10-year Bund yield fell to a four-week low as global borrowing costs declined amid escalating trade war fears. Still, the spread between US 10-year Treasury yields and German Bunds has narrowed by the sharpest margin since 2008 (excluding pandemic-related moves). This has coincided with the over 4% rise in EUR/USD this quarter – the strongest Q1 since 2016.
This mostly reflects Germany’s fiscal stimulus package, which aims to support growth. It also reflects the growing concern over inflation risks, potentially keeping ECB rate cutting at bay. But while trade tensions could temporarily lift inflation, a prolonged trade war might weaken growth, turning into a disinflationary force.
For now, euro traders remain on edge because if the US does opt for high tariffs on all EU products this week, EUR/USD could be driven back towards the 200-day moving average nearer $1.07. Conversely, there is a chance traders view this as riskier to the US economic outlook, in which case EUR/USD could move back above $1.09
Lacking directional conviction
George Vessey – Lead FX & Macro Strategist
The British pound edged higher against the euro and slightly lower against the dollar on Monday, though the latter clocked its best month since November 2023. Nervousness about the scale and timeline of Trump’s proposed tariffs keeps direction relatively random, confirming a lack of conviction as to how the currency market should react to the announcements on Wednesday.
With focus on April seasonality and bets the UK economy may prove to be relatively shielded from US tariff announcements this week, the pound looks to be in a more favourable position relative to its peers. Because the UK is perceived to be relatively at little risk to US tariffs relative to major peers, sterling has at times found itself well supported around tariff announcements. Indeed, GBP/EUR has recorded three consecutive weekly advances against the euro, although upside momentum is far from strong and the pair is prone to mean reversion around €1.19. Plus, given the elevated focus on tariffs, anything short of immediate implementation could drive some relief for the euro in the short term.
On the data front, the Lloyds business optimism index was published yesterday. This is a strong leading indicator of economic activity in the UK and has rebounded back to levels seen only a handful of times since 2017. Final PMI figures for March are due this week, but will play second fiddle to the tariff chatter.
Mexican Peso slides, erasing yearly gains as April 2nd approaches
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie falls to one-month lows
The Australian dollar was weaker overnight ahead of today’s Reserve Bank of Australia decision.
According to Bloomberg, of the 30 surveyed economists, only one forecaster is calling for the RBA to cut, with the other 29 expecting interest rates to remain on hold at 4.10%.
The RBA decision is due at 2.30pm AEDT with the governor Michele Bullock’s press conference at 3.30pm.
The AUD/USD was lower, falling 0.6%, with the pair dropping to the lowest level since 4 March.
Global markets stay volatile ahead of tariff deadline
US sharemarkets opened sharply lower overnight but then gained strongly throughout the session in a sign of the ongoing volatility in financial markets.
Last week, the S&P 500 and Nasdaq suffered their worst week since December, with markets on edge ahead of President Trump’s so-called “Liberation Day” of tariff announcements. President Trump has said he will announce further tariffs on 2 April (Thursday morning APAC time).
While equity markets rebounded, key FX markets were lower.
While the Aussie fell, the NZD/USD lost even more, down 0.7%.
The USD/SGD climbed 0.1% while the USD/CNH fell 0.1%.
Eurozone CPI due
In Europe, FX markets performed better with the GBP/USD down only 0.1% while the EUR/USD was flat.
Tonight, markets will be looking to Eurozone March CPI numbers.
The headline annual inflation number is forecast to fall from 2.3% to 2.2% while the core number is forecast to drop from 2.6% to 2.5% according to Bloomberg consensus numbers.
However, a higher inflation number could spark a further euro rally. The EUR has recently surged across APAC with the AUDEUR back near five-year lows overnight. Similarly, the NZD/EUR has also fallen to five-year lows while the EUR/SGD has climbed to eight-month highs.
Eurozone CPI is due at 8.00pm AEDT.
Aussie lower ahead of RBA
Table: seven-day rolling currency trends and trading ranges
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
Written by the Market Insights Team Stagflation fears rock dollar
George Vessey – Lead FX & Macro Strategist
Financial markets remain on edge as President Trump’s tariff rhetoric amplifies uncertainty ahead of major trade policy announcements this week. A sea of red across global equity markets this morning marks the start of hectic week. The S&P 500 is heading for its worst quarter since 2022, but more downside is likely amid risk from a prolonged global trade war. Treasuries could see more upside due to risk aversion, whilst the dollar’s safe-haven appeal has diminished, with selling pressure intensifying – a stark contrast to its dominance during past crises as the US exceptionalism narrative fades and stagflation fears rise.
On the economic data front, the Fed’s preferred measure of inflation came in higher than expected for February and the University of Michigan Consumer Sentiment Index fell to a 2-year low, whilst 5-year inflation expectations surged to 4.1% – the highest since 1993. The Atlanta Fed GDP nowcast was adjusted lower to -2.8% for Q1, down from -1.8% earlier last week. All of this added to worries the US is heading for a bout of stagflation at a time when investors are worried that Trump’s trade levies combined with a broader sense of uncertainty will hurt US economic growth while also increasing price pressures.
Over the weekend, President Donald Trump reaffirmed plans to impose reciprocal tariffs on all countries this week and reportedly urged his advisers to take a more aggressive stance on trade policies. Markets are increasingly worried that these measures could trigger retaliation from key trading partners, reignite inflation, and slow economic growth.
Looking ahead, markets will focus on Trump’s tariff announcements, and their implications for trade and inflation, but key data releases will also be monitored, including the March employment report, factory orders, and PMI updates, which will provide insights into the economic impact of trade tensions. Investors will also monitor Fed Chair Powell’s remarks for clues on monetary policy adjustments. With volatility expected to persist, the dollar’s trajectory remains uncertain, shaped by geopolitical developments and shifting sentiment.
Tariffs are backfiring for the U.S.
Kevin Ford – FX & Macro Strategist The US economy is sending mixed signals, creating a challenging landscape for businesses and investors alike. In March, consumer confidence fell sharply, reaching its lowest point since January 2021—a sentiment echoed by the University of Michigan survey. Although S&P PMIs indicated some improvement, the gains were concentrated in the services sector, likely supported by favorable weather conditions. Meanwhile, manufacturing PMIs weakened, possibly reflecting earlier front-loading.
Compounding this uncertainty, tariffs remain a source of inflationary pressure concerns, raising critical questions for the Federal Reserve: Will these tariff-driven price increases prove temporary, or will they spark more persistent inflationary effects? Recent data has done little to ease concerns. On Friday, the core PCE deflator rose 0.4% month-over-month, surpassing expectations. At the same time, real personal spending edged up by just 0.1% month-over-month, while January’s contraction was revised further downward to 0.6%. These developments suggest that declining confidence is beginning to translate into tangible behavioral shifts. Inflation expectations are also trending higher, as revealed in the final University of Michigan survey, which reported elevated near-term and long-term forecasts.
Looking ahead, beyond the so-called ‘Liberation day’ on Wednesday, markets are focused on the upcoming US labor market report. Nonfarm payroll growth is projected to slow to 125,000 in March, down from February’s 151,000, with risks skewing toward even weaker outcomes as layoffs—particularly in the tech sector—continue to unfold. Meanwhile, the unemployment rate is expected to hold steady at 4.1%, following a slight uptick last month.
At present, soft data paints a more concerning picture than hard data, but the precise point at which sentiment shifts meaningfully impact behavior remains uncertain. For investors, these factors weave a complex narrative. Declining consumer confidence, mounting inflation risks, and potential labor market softening highlight the importance of adaptability and strategic foresight in navigating an increasingly unpredictable economic environment.
Euro pounces on US weakness
George Vessey – Lead FX & Macro Strategist
European stock markets declined sharply on Friday, with the Stoxx 50 dropping 1.1% and the Stoxx 600 falling 0.8%, marking its third consecutive negative close. But the euro ended the week on a stronger footing versus the US dollar as traders sold the US currency amidst a string of disappointing US data. EUR/USD rebounded back above the $1.08 handle after support held firm around its 50-week moving average at $1.0738.
Investors are closely watching the looming April 2 deadline, when Trump is set to unveil reciprocal tariffs on key trading partners. Trump has already announced a 25% tariff on imported cars and light trucks, set to take effect this week. While uncertainty over tariffs is weighing on markets, the initial announcement could pave the way for further negotiations, potentially softening the final impact. In fact, the European Commission has signalled that it has prepared concessions for the US to escape reciprocal tariffs.
Meanwhile on the data front last week, the eurozone’s latest economic activity indicator showed the fastest expansion in seven months, with the composite PMI inching up to 50.4. While this was slightly below market expectations, the manufacturing sector outperformed, offering a glimpse of optimism for an economy that has struggled with stagnation. Germany led the improvement, as anticipation builds over the economic boost from its newly approved fiscal expansion focused on infrastructure and defence.
Europe’s fiscal boost still supports the medium-term bullish outlook for the euro, which is why the repricing at the back end of the euro’s volatility skew shows sentiment is the least bearish for the euro in over three years.
Preliminary inflation readings from Italy, Germany and the wider euro-region are also due this week, but will play second fiddle to tariff developments.
Tariff resilience underpins positive pound view
George Vessey – Lead FX & Macro Strategist
Due to concerns that President Trump’s tariffs will ignite inflation and dampen economic growth in the US, dollar selling is acting as a tailwind for GBP/USD, which is looks to be clawing its way back towards $1.30. With a gain of over 3%, the pound is on track for its best month since November 2023 against the US dollar, whilst April is one of the pair’s strongest months of the year historically.
On the domestic front, despite the UK government’s fiscal plans facing mounting scrutiny, the pound has held up relatively well in the wake of the Spring Statement. Gilts remain vulnerable as concerns over sustainability of the spending plan take centre stage, with the fiscal buffer eroding. But investors aren’t dumping the pound and gilts simultaneously like they were at the start of the year when confidence in UK policy was bleak, and stagflation fears were rising. A slew of data last week showed UK services PMI beating expectations, offsetting the fall in manufacturing, whilst retail sales, rose 1% m/m in February – against exceeding consensus forecasts and keeping Bank of England easing bets at bay, with just two more rate cuts fully priced in by year-end.
Meanwhile, sterling appears to hold an international advantage when it comes to tariffs as well. Optimism that the UK will avoid the worst of Trump’s reciprocal tariff plan makes it an attractive hedge against tariff noise. This is also evident via its rare positive (albeit weak) correlation with the VIX fear index. President Trump has suggested he may not take all of the non-tariff barriers into account when setting tariff rates, specifically mentioning VAT taxes, which will be welcomed by the UK. The UK’s greater resilience to direct tariffs than the eurozone could also act as a tailwind for GBP/EUR, which is hovering beneath the €1.20 handle this morning.
Gold surges to record high Table: 7-day currency trends and trading ranges
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
