Category Currency

Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist

USD stronger as tech earnings boost 

The US dollar was mostly higher overnight as US corporate earnings, including Microsoft and Meta, came in much stronger than expected despite growing concerns around the impact of tariff uncertainty.

The corporate news contrasted with a weaker than expected US GDP number with first-quarter advance US GDP falling 0.3% versus market expectations for a 0.3% gain.

In FX markets, the US dollar was mostly higher, with the USD index back near two-week highs.

European FX was mostly weaker with the euro and British pound both lower overnight.

Across APAC, the moves were more muted. The USD/SGD eased to one-week lows while the USD/CNH inched higher from one-month lows.

The NZD/USD fell to two-week lows before later recovering to end flat.

Australian CPI above consensus, but RBA remains likely to cut

The AUD/USD bucked the trend with the pair up 0.3% and still broadly near four-month highs.

The Australian dollar was higher yesterday after headline CPI for the first quarter of this year was 2.4% year over year, higher than the 2.3% consensus expectation.

The trimmed mean measure, which the Reserve Bank of Australia most closely watches, was 2.9%, higher than the consensus of 2.8%.

While higher, this is about what was expected and probably “good enough” for the RBA to make a 25 bps cut in May. The market continues to see a rate cut in May as a “sure thing” with 27bps priced in (source: Bloomberg).

The AUD/USD remains broadly near four-month highs, and hovering around 200-day EMA key resistance of 0.6399 – a technical level that has historically provided major resistance.

Official PMIs from China miss as USD/CNH sticks near lows

The Chinese economy looks to be showing some of the first impacts of tariff worries, with China’s official manufacturing PMI for April reported at 49, below the 49.7 forecast and 50.5 before.

PMI for non-manufacturing was 50.4, missing both the previous 50.8 and the expected 50.6. April’s composite PMI of 50.2 was much lower than March’s 51.4.

Specifically, manufacturing fresh export orders fell from 49 to 44.7, according to statistics from the National Bureau of Statistics.

USD/CNH has now corrected more than 2% from its recent highs of 7.4290 on 8 April, 2025.

Next key support level for USD/CNH lies on 200-day EMA of 7.2560.

USD buyers might look to take advantage soon given our expectations of higher USD/CNH over time. Our 12-month price target for USD/CNY is 7.5700.

Aussie higher after CPI   

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 29 April – 3 May

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, or a financial offer.

Written by the Market Insights Team

Could the worst still be ahead?

Kevin Ford – FX & Macro Strategist

Mid-week has brought another noteworthy price movement in markets. The 10-year U.S. Treasury yield dropped from a recent high of 4.58% a few days ago to 4.16% yesterday. With market fears easing—reflected by the VIX Index falling below 25—U.S. stocks have held steady, maintaining last week’s gains. However, the dollar remains stagnant despite the broader market rally.

Growth concerns continue to weigh heavily on sentiment. WTI oil prices are approaching a potential break below $60 per barrel. This cautious outlook is also shaping the U.S. yield curve, which has steepened recently—a development that typically supports a weaker dollar, especially when worries about growth dominate and volatility eases.

Could the worst still be ahead? The growing gap between weak soft data and hard data still brings key points. This disconnect could stem from lags in economic impacts, front-loaded consumption aimed at avoiding higher prices or disconnect between consumer sentiment and behavior. If the issue is simply a lag, the recent market rebound may not hold for long.

What else might support the growing fears of a slowing U.S. economy? First, the Beige Book, which last week highlighted a significantly worsening outlook in several Districts as economic uncertainty, particularly around tariffs, increased. Second, ocean container bookings from China to the U.S. are down over 60%. The U.S. imports $600 billion worth of goods from China, with 95% arriving by sea and retailing for around $2 trillion. Prolonged tariffs at current levels could deal a major blow to the retail economy. However, quarterly earnings from U.S. companies provide additional insights. While uncertainty is now widely regarded as the new normal, some companies have noted that consumer health remains strong. This was echoed by the CEOs of Amex and Capital One in their recent earnings calls. Clearly, the impact of tariffs will vary across sectors.

Today, the US GDP, PCE, and April jobs report will shed light on whether hard data confirms the trends that soft data has been signaling in recent weeks.

No changes for the Loonie

Kevin Ford – FX & Macro Strategist

A relatively quiet end of the month for the the Loonie, which has been supported by sustained dollar weakness, with the DXY index dropping 4.5% this month to its lowest level since April 2022. The USD/CAD has gained 4% in April, finding solid support at 1.38 after five consecutive weeks of declines from 1.44. Remaining below its 200-day SMA of 1.4015, the Loonie has established a key support level at 1.378 and resistance at 1.39.

Current price action indicates a potential medium-term rebound, with the pair possibly revisiting the upper end of the 1.373–1.40 range. From a technical perspective, a death cross has formed, with the 200-day SMA crossing below the short-term 20-day SMA—a pattern that typically signals continued downside momentum.

While today brings the release of Canada’s advanced GDP figures for February, market attention will largely be driven by hard data out of the U.S. and any trade policy remarks from the U.S. administration, which could influence sentiment and price action.

Mexico and U.S. water agreement

Kevin Ford – FX & Macro Strategist

The U.S. and Mexico reached two critical agreements on Monday, easing tensions that threatened to complicate trade negotiations sparked by tariffs imposed by the U.S. administration.

First, Mexico committed to deliver additional water from the shared Rio Grande basin to Texas farmers. This move comes after U.S. concerns that Mexico was failing to meet its obligations under a decades-old water-sharing agreement. Second, the two nations reached a deal to tackle the New World screwworm pest in Mexico, averting the possibility of restrictions on U.S. livestock imports from its southern neighbor.

Mexico is showing its ability to work with the U.S. despite the confrontational tone of the U.S. administration. Unlike Canada, which has opted for retaliation in response to tariffs, Mexican President Sheinbaum has chosen a path of negotiation. This approach was evident in the recent agreements, including Mexico’s commitment to deliver more water to Texas farmers and a joint effort to tackle the New World screwworm pest. While details of the water-sharing deal remain scarce, both nations reaffirmed the value of the 1944 treaty, agreeing it continues to benefit both sides without needing renegotiation.

These agreements reflect Mexico’s focus on maintaining critical trade and agricultural ties, a reassuring signal for markets wary of escalating tensions. By addressing key issues through collaboration rather than conflict, Sheinbaum’s strategy highlights the importance of agriculture in strengthening U.S.-Mexico relations and navigating the challenges posed by tariffs.

WTI Oil drops below $60 a barrel

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 28- May 2

All times are in ET

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 quothave 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 turns sharply from recent key levels

The Australian dollar hit new year-to-date highs versus the US dollar overnight before turning lower ahead of today’s all-important Australian inflation data.

The March-quarter inflation number, due at 11.30am AEST, will be key ahead of the Reserve Bank of Australia’s next meeting on 20 May. 

Financial markets are looking for Australian headline annual inflation to fall from 2.4% to 2.2% while the closely-watched trimmed mean number is forecast to fall from 3.2% to 2.8% (source: Bloomberg).

With a 25bps rate cut to 3.85% now fully priced in, a lower number today could open up the possibility of a 50bps cut and cause the AUD to fall.

The AUD/USD ended the session down 0.7%.

In other markets, the US dollar was mostly higher, with NZD/USD down 0.7% although the USD/SGD bucked the trend and remained steady near one-year lows.

China reaffirms no trade talks are underway with the US

Bloomberg reports that Guo Jiakun, the spokesperson for China’s foreign ministry, reaffirmed the government’s stance that China is not involved in trade negotiations with the United States.

The spokesman for the ministry stated during Monday’s daily briefing that there haven’t been any phone conversations with the US lately, which appears to be a clear refutation of US President Trump’s claim that China’s Xi Jinping had called him. 

While the USD was stronger in most markets overnight, the USD/CNH extended recent losses.

USD/CNY has retreated by 1% from the recent all-time high of 7.3511.

Similarly, USD/CNH is now down almost 3.0% from the recent all-time highs 7.4290.

Next key support for USD/CNH is its 200-day EMA of 7.2536 – a key level of opportunity for USD buyers.

ECB De Guindos sees modest growth in Q1 as EUR gains

According to Luis de Guindos, Vice President of the European Central Bank, new data points to modest growth for the Eurozone in the first quarter of 2025.

He stated that inflation is anticipated to stay close to the ECB’s 2% objective when he presented the ECB’s 2024 annual report to the European Parliament’s Committee on Economic and Monetary Affairs.

“The central bank is not pre-committing to a particular rate path and will continue to follow a data-dependent and meeting-by-meeting approach to setting the appropriate monetary policy stance, especially given current uncertainty,” he said. 

Chart shows falling oil prices bode well for EUR/USD. That said, the key support handle for EUR/USD is at 21-day EMA 1.1241.

For EUR/SGD, it rests on 21-day EMA of 1.4835, after correcting from recent short-term highs of 1.5113.

Aussie down as CPI looms  

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 29 April – 3 May

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, or a financial offer.

Written by the Market Insights Team

Liberals win, but no majority is a problem

Kevin Ford – FX & Macro Strategist

The Liberal Party was seemingly dead and buried in December last year. Yesterday, they won the federal election. Mark Carney, a banker with no prior experience as a Member of Parliament, is now Canada’s newly elected Prime Minister. Here are some key insights that emerged following the election results:

– With votes still counting, the Liberals are poised to form a minority government, while the Conservatives have significantly expanded their seats and voter base. Meanwhile, the NDP and Bloc Québécois suffered dramatic losses. 

– The Conservatives secured the highest number of votes in a federal election since 1988. 

– The NDP emerged as the biggest loser, with their seven-seat gain putting them at risk of losing party status. Back in 2015, the NDP came very close to forming government.

– Ontario, particularly the Greater Toronto Area, flipped to the Conservatives, who took 10 seats from the Liberals. 

– The 905-belt also shifted to the Conservatives. 

– Southeastern Ontario, a key region for the auto industry, followed suit. 

– The popular vote was nearly evenly split, with the Liberals edging out the Conservatives by just 1%. 

– After two decades, the Conservative leader lost his own riding to a Liberal candidate. However, he’s very popular in his own caucus and will likely go back to parliament.

– In Quebec, the Liberals gained 10 seats, aided by Justin Trudeau’s final days as Prime Minister, during which he focused on securing support and committing to significant long-term investments for the province. 

Canadians are not accustomed to a bipartisan system. Historically, government has been more diverse, making this minority government— with a strong opposition and a weakened NDP—a rare and complex scenario. This dynamic shift attention to the Bloc Québécois. Despite losing seats, their relative influence has grown, as the Liberals will now rely on their support to push legislation forward.

This outcome comes at a critical juncture for Canada; the economy faces mounting threats from U.S. tariffs, young Canadians grapple with concerns over housing affordability, productivity continues to lag across key industries, internal trade projects face hurdles due to a lack of unity between Quebec and the federal government, and as Canada confronts the trade war with the U.S., the urgency to diversify its economy away from U.S. reliance feels overdue. 

Since March 3rd, the USD/CAD has been dropping from 1.45 and has found a strong support level at 1.38. After the news of a likely Liberal minority win, the USD/CAD reacted to the upside, trading as high as 1.387.

U.S. growth prospects slashed

Kevin Ford – FX & Macro Strategist

The central question for both markets and the economy right now is not just what the underlying economy is currently doing, but what it’s likely to do next. The latter seems to be the most critical factor in shaping sentiment. At present, the U.S. economy appears relatively strong. The job market is solid, with people earning and spending steadily. Household net worth has declined but remains in decent shape. Both consumers and companies show low leverage, leaving the economy well-positioned to face the ripple effects of tariff shocks. Additionally, AI capital expenditure has been a key support for growth, reinforcing the stability of the economy in recent months.

Despite this, uncertainty looms large. Economists and analysts are slashing their prospects of economic U.S. economic growth.

Surveys repeatedly highlight uncertainty, and forward guidance continues to echo the same sentiment. The question remains: when will these challenges tip the economy into recession? For context, the Dallas Fed Manufacturing report—a measure that’s been tracked since late 2004—shows the Business Conditions Index has seen only one larger three-month decline than the current one (-49.9), and that was during the COVID pandemic.

Another consideration is the frontloading of purchases, particularly in durable goods. This trend could sustain positive momentum for a few months, giving the illusion of stability. However, if this frontloading subsides, the market may enter a quieter phase, possibly followed by a sudden downturn—a scenario that has a reasonable chance of unfolding. This messy data, caused by frontloading, reflects the complicated dynamics at play.

The U.S. administration is stepping in to offer relief to the auto industry, according to the Wall Street Journal. The White House announced that auto manufacturers will receive refunds of up to 3.75% of the value of new cars in their first year. Following this auto-tariff news, the dollar has regained some ground but remains vulnerable amid concerns over weakening economic prospects.

Plenty of supporting factors for euro

George Vessey – Lead FX & Macro Strategist

Expect EUR/USD to continue trading around $1.13 to $1.14 in the very near term. The worst case for EUR/USD is probably $1.1250, should US data surprise on the upside. However, $1.15 could be achievable should any of this week’s job releases suggest that tariff uncertainty has already triggered layoffs. The pair remains circa 10% higher year-to-date, well above long-term moving averages, with FX options traders eying $1.20 later this year.

Although the European Central Bank is expected to lower interest rates again, it also looks as though the June Federal Reserve meeting is live for a rate cut. That will provide underlying support for the euro and keep it on a medium-term path higher.

Meanwhile, European assets could also gain from Ukrainian President Zelenskiy’s optimism for lasting peace after discussions with President Trump.

Plus, global energy demand may decline due to the US recession threat, China’s economic slowdown, and OPEC+ rifts—factors favoring cheaper oil prices. Oil-producing nations face budget challenges amid lower crude prices, while net importers like Europe benefit from reduced energy costs in transportation and industry. As a result, Europe’s energy importer status positions the euro for potential additional support.

Oil drops 5% in a week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 28- May 2

All times are in ET

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 quothave 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

Data to drive dollar

George Vessey – Lead FX & Macro Strategist

The US dollar continues wallow near 3-year lows against a basket of currencies. FX volatility has eased off from multi-year highs though as traders turn to US data – focused on gauging the real-world impact of tariff stress.

Recent tariff turmoil has eased, with the worst-case outcome averted for now. Still, global tariff levels remain far higher than pre-‘Liberation Day.’ Current measures include a 10% universal tariff and sectoral charges on key industries such as steel, aluminium, cars, and possibly pharmaceuticals, which could significantly impact the global economy. Even with the temporary 90-day suspension, these elevated tariffs risk pushing global trade conditions back to levels not seen in decades

The recent rally in equity markets appears vulnerable as hopes for a meaningful de-escalation between the US and China fade. The fragile optimism, driven by temporary easing in trade tensions, could face further headwinds if the dialogue stalls or tensions escalate again. This uncertainty may weigh on risk sentiment across global markets, keeping a lid on risky assets.

On the data docket, key releases include the first-quarter US GDP report and Friday’s April jobs report this week. GDP consensus sits at 0.4% q/q annualized, but expectations vary widely, shaped by front-loaded imports and optimistic investment trends.

Plenty of supporting factors for euro

George Vessey – Lead FX & Macro Strategist

Expect EUR/USD to continue trading around $1.13 to $1.14 in the very near term. The worst case for EUR/USD is probably $1.1250, should US data surprise on the upside. However, $1.15 could be achievable should any of this week’s job releases suggest that tariff uncertainty has already triggered layoffs. The pair remains circa 10% higher year-to-date, well above long-term moving averages, with FX options traders eying $1.20 later this year.

Although the European Central Bank is expected to lower interest rates again, it also looks as though the June Federal Reserve meeting is live for a rate cut. That will provide underlying support for the euro and keep it on a medium-term path higher.

Meanwhile, European assets could also gain from Ukrainian President Zelenskiy’s optimism for lasting peace after discussions with President Trump.

Plus, global energy demand may decline due to the US recession threat, China’s economic slowdown, and OPEC+ rifts—factors favoring cheaper oil prices. Oil-producing nations face budget challenges amid lower crude prices, while net importers like Europe benefit from reduced energy costs in transportation and industry. As a result, Europe’s energy importer status positions the euro for potential additional support.

Resilient sterling in risk-on conditions

George Vessey – Lead FX & Macro Strategist

GBP/USD’s rose by around 1% on Monday, back above the $1.34 mark and near its highest rate in three-year highs, but upside momentum appears to be waning, pressured by a modest US dollar rebound and a cautious market mood.

The pound is also under pressure amid solid expectations that the Bank of England (BoE) will lower interest rates by 25 bps to 4.25% in May. Investors are paying close attention to Tuesday’s speech from BoE official Dave Ramsden. Should his tone lean dovish, it could add further downside to the pound in the near term.

Still, sterling is trading above most of its key long-term averages against many of its major peers barring the safe haven USD alternatives of the JPY, EUR and CHF. Against the euro though, sterling is back above its 21-day moving average in a sign of potential trend change beckoning to the upside.

GBP/EUR should remain supported if global risk sentiment stays sturdy given its higher beta to risk than the euro.

Oil down 4.5% in a week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 28-May 2

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, or a financial offer.