Category Currency

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

Powell comments drive USD lower as equities slump

The greenback extended its losses, dropping below the key 100 level as Fed Chair Powell’s comments exacerbated market concerns.

The USD index fell to around 99.30 after Powell stated the “Fed has time to wait for greater clarity for the time being” and warned that tariffs may derail both labor market and inflation goals this year.

Powell noted he expects both unemployment and inflation rates to tick higher , emphasizing that “we can’t have strong labor markets without price stability” and that “inflationary effects of tariffs may be more persistent.”

The Canadian dollar was among the gainers, with USD/CAD close at 1.3859 after the Bank of Canada held rates steady.

The Japanese yen showed significant strength, with USD/JPY dropping to below 142.00 as US Treasury yields declined.

Several emerging market rate decisions are scheduled, with many countries observing local holidays ahead of a long weekend in the US.

Dollar index was down 0.3% overnight, Antipodeans were up with NZD/USD gained 0.6% and AUD/USD gained 0.4%. USD/CNH down 0.4%, USD/JPY down 0.9% and USD/SGD was down 0.6%.

Fed’s Hammack sees risks of reduced growth, employment, and higher inflation

Fed President Hammack, who did not cast a ballot, has stated in a speech that she believes the risks are skewed towards greater inflation, slower growth, and fewer jobs. 

She believes that a fairly conservative approach is justified because financial circumstances have tightened.  She reaffirmed the significance of maintaining anchored inflation expectations.

Looking at another safe haven proxy, the Yen, which has strengthened considerably overnight.

USD/JPY is now at the low end of its trading range, with the completion of head and shoulders top at 140.25, where USD buyers may look to take advantage.

China now faces the potential for up to 245% tariffs

A White House fact sheet released Tuesday night that claimed, “China now faces up to a 245% tariff on imports to the US as a result of its retaliatory actions,” has garnered a lot of attention. 

This doesn’t appear to be another escalation, which is why the word “faces up to” is crucial.  This most likely refers to the entire spectrum of tariffs imposed on particular commodities. 

President Trump’s 145% tariffs on China frequently come in addition to any existing levies.  With the addition of the most recent round of tariffs, the total for “syringes and needles” is now 245%. 

It appears that the White House information sheet also uses that number.  There is no need for further escalation; the issue now is how the two parties convince themselves to sit down for talks.

USD/CNH is now down circa 2% from its recent daily highs of 7.4257 on April 8^th, 2025.

USD buyers may look to take advantage, with the next key support for USD/CNH at 50-day EMA of 7.2860.

Antipodeans swing back to strength

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 14 – 18 April

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

Loonie slips on softer March inflation

Kevin Ford – FX & Macro Strategist

The Government of Canada bond curve saw gains at the short end, while the Canadian dollar weakened, following the release of March inflation data that came in lower than anticipated. Canada’s annual inflation rate fell to 2.3% in March 2025, down from the eight-month high of 2.6% recorded in February. This was below both market expectations of 2.6% and the Bank of Canada’s forecast of 2.5%.

The decline in inflation can largely be attributed to temporary factors, including a drop in gasoline prices (-0.3 percentage points) and reduced travel service costs (-0.3 percentage points). However, these drivers may not persist in the near term. In contrast, the expiration of the GST holiday added upward pressure on food prices, rising 3.2% compared to 1.3% previously, partially offsetting the overall decline. Restaurant costs were a significant contributor to this increase, jumping 3.2% following a decline of 1.4% in the prior period. Month-over-month, overall prices inched up by 0.3% from February to March.

Despite these fluctuations, the year-over-year trend for core CPI is encouraging. It has steadily eased from 2.9% a year ago to 2.3% in March. This downward trajectory suggests that underlying inflation is nearing the Bank of Canada’s target, providing some reassurance as the economy navigates challenges, including the trade war with the U.S.

Another important signal comes from the domestic demand front. Recreation services experienced a significant 2.1% month-over-month decline—marking the third steepest drop on record. Shelter costs, once a key driver of inflation, have now cooled for the second consecutive month, with rents and mortgage interest costs showing particularly subdued growth at under 0.2%. Shelter accounts for 30% of the total weight in Canada’s CPI basket, followed by Transportation (17%) and Food (16%), making this deceleration noteworthy for investors tracking inflation trends.

Following the CPI data release, the probability of a BoC rate cut has edged up slightly to 41%. However, markets anticipate a pause after seven consecutive cuts, giving policymakers time to evaluate the impact of tariffs on growth and inflation. Looking ahead to the BoC’s June meeting, expectations for a 25-basis-point cut remain high, with probabilities standing at 85%.

Trade uncertainty weighs on US assets

George Vessey – Lead FX & Macro Strategist

Risk-off moves are picking up once again as global equity markets turn lower and the US dollar extends its drop – trading at about the lowest level in three years. President Donald Trump urged China to initiate negotiations to address the escalating trade conflict between the world’s two largest economies. In response, China reportedly instructed airlines to halt further deliveries of Boeing Co. jets, marking its latest retaliatory move against Trump’s decision to impose tariffs of up to 145% on Chinese goods. The Trump administration then imposed new restrictions on Nvidia’s chip exports to China. These developments underscore the deepening standoff between the US and China, with no resolution in sight as both nations continue to raise trade barriers to unprecedented levels.

Market volatility has cooled off this week, but this does not signal that the critical issues facing investors have been resolved. Instead, trade uncertainty has surged to previously unimaginable heights, surpassing levels seen before “liberation day”. Overall US policy uncertainty also remains elevated and the adage that markets despise uncertainty remains frustratingly accurate – the current climate exemplifies this sentiment to an extreme degree.

Data from the US yesterday revealed companies’ expectations for business activity six months ahead plunged in April to its lowest since 2001, according to the Empire State manufacturing survey, while price increases — both actual and expected — became more widespread.

US assets, including the dollar, continue to carry a notable risk premium amid growing investor caution. The traditional correlation between the dollar and Treasury yields has reached its weakest point in three years, reflecting heightened doubts about the safety of US assets during periods of economic stress. The dollar’s rapid decline has been driven by capital flight from US markets, as fears grow that the Trump administration’s trade war could tip the economy into a recession.

Yields on US long-term debt remain near 17-month highs. Typically, higher bond yields bolster the dollar; however, the dynamics have diverged this time. Scepticism about the dollar’s haven appeal and its central role in the global financial system is causing this decoupling.

Pacey euro appreciation to force ECB’s hand

George Vessey – Lead FX & Macro Strategist

The euro resumed its rally against the US dollar this morning, though it remains in overbought territory based on the daily relative strength index. While the broader outlook favors the euro in the medium term as funds shift away from the dollar, the European Central Bank (ECB) may act to slow its appreciation with a rate cut expected tomorrow.

EUR/USD has surged approximately 5% this month, reaching fresh three-year highs, while EUR/CNY has climbed 6% since the March ECB meeting, hitting a decade high. The depreciation of the Chinese yuan relative to the euro raises questions about its potential to further support China’s exports to the EU, especially as US-China trade is set to decline sharply due to tariffs. President Trump’s ongoing tariff negotiations aim to pressure US trading partners to limit their dealings with China, a move Europe might consider given its growing trade deficit with China since 2020.

The ECB is widely anticipated to cut rates by 25 basis points on 17 April, citing intensified growth risks linked to US tariffs. While rates may be nearing neutral, further tariff-driven cuts remain possible. That said, the correlation between FX and rate differentials has evaporated since “liberation day” and the ongoing rotation from US to European assets could mean that EUR/USD will remains supported around $1.13 even if the ECB leans dovish.

On the macroeconomic front, investor confidence in Germany’s economy has plummeted amid the escalating trade war. The ZEW institute’s expectations index fell sharply to -14 in April from 51.6 the previous month, highlighting the growing uncertainty surrounding global trade dynamics.

Pound mixed after slower inflation

George Vessey – Lead FX & Macro Strategist

The pound remains strong versus the US dollar but under pressure against the euro after lower-than-expected UK inflation data provided temporary relief for the Bank of England (BoE), which is preparing for the economic fallout of Trump’s tariffs.

Headline inflation came in at 2.6%, while services inflation – a key indicator for BoE policymakers – declined more than anticipated, falling to 4.7% in March from 5% in February. However the dip in inflation may only be short-lived. Rising household bills and higher business costs are expected to drive inflation higher from April onwards. Thus, the BoE faces a challenging task as it balances a weakening jobs market against the likelihood of rising inflation later this year, partially fueled by escalating living costs.

The pound has gained ground versus the dollar, eying $1.33, but remains on the back foot against the euro. As a reserve currency, sterling is part of the broader devaluation of the dollar. However, the euro benefits from higher liquidity and significant repatriation of financial assets into the Eurozone, supported by its large trade surplus with the US.

Overall, sterling’s 2.8% monthly gain against the dollar reflects dollar weakness rather than inherent pound strength. The pound has lost ground against six of its G10 peers, gaining only against three. A genuine sterling rally would show broader strength, particularly against the euro. Instead, sterling has underperformed the euro, amidst elevated volatility, mirroring its behaviour during the pandemic’s initial wave. As volatility eases, the pound could recover ground versus the common currency, supported by the UK’s relative resilience to tariffs and stabilized demand-side data.

Gold is up 7% in the last week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 14-17

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 quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

As the complexities of international trade and the global supply chain increase, manufacturers must navigate a maze of geopolitical disruptions, regulatory challenges, currency fluctuations and rising costs.

A 2024 Customs Support survey of 33 leading logistics service providers (LSP) and goods owners (GO) found that 51% of businesses have been affected by global shocks such as the Suez Canal blockage and the war in Ukraine.

Additionally, 42% of companies have had to address challenges arising from sanctions against Russia, including increased compliance risks and higher costs when working with international suppliers. Nearly half (45%) of companies surveyed needed specialized expertise to help ensure compliance with local and international customs regulations and deal with stricter environmental regulations.

Cross-border payments and manufacturing

Cross-border payments are financial transactions that occur between parties located in different countries. These transactions involve the transfer of funds or assets from one country to another and can be initiated by individuals or businesses.

For manufacturers, cross-border payments are a crucial aspect of international trade, enabling them to import raw materials and export finished goods. Efficient cross-border payments ensure that manufacturers maintain smooth operations, manage their supply chains effectively and fulfill orders from customers around the world.

Key cross-border payments challenges for the manufacturing sector

With ever-changing regulations and ongoing trade disruptions, manufacturing businesses need efficient, secure and cost-effective payment solutions to ensure smooth operations. Finding a reliable partner to streamline cross-border payments is essential.

One of the most significant issues is foreign exchange (FX) volatility and currency risk. Adverse movements in the relative valuation of money can erode growth plans or increase costs unexpectedly. Delays in processing payments also can negatively impact production schedules, customer satisfaction and overall operational efficiency. Not to mention businesses must also consider hidden transactions, exchange and processing fees.

Careful planning and verification of details before sending payments are crucial to ensure accuracy and efficiency, especially in the face of FX volatility and currency risk.

Plus, regulations are constantly changing, forcing businesses to stay ahead of the curve to avoid fines or penalties due to noncompliance. Without a streamlined process to coordinate differing methods and suppliers, manufacturers can face costly inefficiencies and errors.

Making cross-border payments work for manufacturers

Global payment solutions, offer by providers such as Convera, offer risk management tools that allow businesses to lock in exchange rates and protect themselves from unexpected fluctuations*. These tools, including forward contracts and FX options, can help businesses mitigate risk and manage costs in a volatile global market.

Manufacturers mitigating risk with Convera: Melecs and Mecatherm

Melecs is an international leader in automotive electronics, that turned to tailored FX risk management strategies developed in collaboration with Convera to combat the impact of currency fluctuations on its global operations.

“Convera has helped us develop a much more strategic and proactive approach to currency hedging, which has ultimately helped us reduce our FX risk and consequently protect our margins,” says Ernst Mayrhofer, former CFO and co-owner of Melecs.

With Convera, Melecs reduced the FX fluctuation range in its balance sheet from approximately 5% of the currency requirement to around 1-2%.

Similarly, Mechatherm, a global manufacturer of industrial baking equipment, utilized Convera’s FX hedging expertise to bolster its export-centered business.

“Our business growth was very restricted by our bank’s policies on currency transactions, and I also can’t believe how much time I used to spend online watching currency movements to safeguard our profit margins. Having a currency specialist partner has made life so much easier,” says Alan Burrows, Managing Director of Mechatherm.

Leveraging Convera’s support, Mechatherm gained the ability to hedge much larger amounts, without depositing funds in a security account, making their cashflow much more fluid.

Beyond tailor-made FX risk strategies

Convera can boost manufacturers’ efficiency in other ways too. Another essential factor when managing international payments is speed and reliability. Convera can process payments quickly and ensure timely transfers to maintain operational efficiency while reducing the risk of supply chain delays caused by slow payments.

Moreover, specialists like Convera can empower businesses to make local currency payments. This delivers savings on transaction fees and means you know the true cost of your payment from the outset – no surprise exchange rates. Local currency payments also benefit the recipient as they avoid conversion fees and the risk of exchange rate fluctuations. Some suppliers may be willing to lower their invoice if a business offers to pay in local currency.

When evaluating payment providers, finding one that offers clear, upfront pricing, without hidden fees, is crucial. Transparent partners like Convera reveal the true cost of cross-border transactions, optimizing payment strategies.

Local and international regulatory compliance is another key concern. Manufacturers should look for a cross-border payment provider with extensive regulatory and compliance expertise. Convera offers built-in compliance checks and risk monitoring to help businesses stay on top of the latest rules and sanctions.

For businesses managing payments with multiple suppliers across different countries and currencies, a centralized payment platform can greatly simplify the process. Convera offers streamlined integration with accounting systems and enterprise resource planning (ERP) software to manage payment flows in over 140 currencies, providing real-time flexibility while reducing the administrative burden.

How cross-border payments can enhance manufacturing for years to come

The digitalization of cross-border payments is transforming how businesses — including manufacturing companies — make international transactions. New technologies, such as blockchain and artificial intelligence (AI), are being applied to cross-border payments to make them faster, cheaper and more secure.

For example, some payment processors are using blockchain to enable real-time cross-border payments, while others are using AI to detect and prevent fraud. By embracing these innovations, manufacturers can streamline their payment processes, reduce costs and enhance the overall security of their international transactions.

Innovations in blockchain networks, such as real-time payment rails and distributed ledger technology, are poised to transform the cross-border payments landscape. These advances will allow manufacturers to access working capital more quickly and maintain transparent, immutable ledgers that enhance security and improve the efficiency of cross-border payments.

Multi-currency digital wallets are another promising development as they allow businesses to hold, send and receive payments in multiple currencies, often at more favorable exchange rates.

The integration of AI and machine learning into payment solutions is also on the horizon, promising more security and efficiency with optimized payment routing, fraud detection and real-time risk management.

As emerging markets continue to grow, fintech companies are increasingly focused on offering low-cost, immediate payment solutions that facilitate international trade and promote financial inclusion. Manufacturers looking to expand into new regions will benefit from such innovations, allowing them to access previously untapped markets and strengthen their global reach.

Overcoming manufacturing B2B payment challenges with Convera

By partnering with the right provider, such as Convera, manufacturers can meet the multifaceted challenges of an evolving financial world and ensure that their international operations run smoothly, securely and cost-effectively.

Convera provides automated and comprehensive tools to streamline payments, limit risks and help manage fluctuations in volatile currency markets across 200 countries and territories. From developing a powerful FX hedging strategy to lowering costs, entering new markets and more, contact us to discover how Convera can help your manufacturing business.

Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.

Plus, register for the Daily Market Update to get the latest currency news and FX analysis from our experts directly to your inbox.

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

US equities pause after rally, USD finds support

The US equities market took a breather after recent gains, while Treasuries attracted buyers as the USD maintained most of its intraday advances amid limited major headlines.

The Canadian dollar weakened after softer-than-expected CPI data, supporting expectations that the Bank of Canada will cut rates by 25bps today.

President Trump is awaiting China’s next move in trade negotiations, with the anticipated Trump-Xi phone call yet to be confirmed, suggesting that de-escalation remains distant.

US-EU trade talks are proceeding slower than planned but remain ongoing, alongside negotiations with India, Japan, and other countries.

Today’s focus in Asia will be on Chinese industrial production, retail sales, and GDP data, alongside UK CPI.

Overnight, Antipodeans were up with NZD/USD gained 0.4% and AUD/USD gained 0.3%.

USD/CNH up 0.2%, and USD/SGD was up 0.3%.

RBA minutes: Wary of further rate cuts

This morning, the minutes of the RBA’s policy meeting from March 31 to April 1, which took place right before US Liberation Day, were made public.

As a result, the possible effects of the higher-than-expected tariffs are not mentioned in the minutes.

“Weaker global demand and the possibility of trade diversion away from the US could reduce inflation in Australia, but a larger exchange rate depreciation or more substantial global supply disruptions could increase inflation,” the RBA stated, seeing two-way risks to inflation.

This supports Governor Bullock’s remarks from last week that patience is required for future rate action and for assessing supply and demand globally.

The May RBA meeting is pricing cuts of 32 basis points.

The markets will be looking to the key resistance level of 200-day EMA of 0.6414 for AUD/USD.

US Empire manufacturing exceeds expectations

In April, the US New York Fed Empire manufacturing index increased from -20 to -8.1, above the expectation of -13.5.

The underlying data indicates lower employment but increasing inflationary pressures.  In six months, the predicted prices paid increased from 58.2 to 65.6. 

Meanwhile, the anticipated six-month workforce dropped from 8.2 to 3.4.

Looking at APAC FX, USD/SGD has rebounded today from the low end of the 30-day trading range, as we’ve highlighted in yesterday’s Daily Updates.

USD/SGD is now near five-month lows. USD buyers may look to take advantage, with the next key resistance for USD/SGD at 200-day EMA of 1.3391.

Antipodeans retreats from the top end of trading range

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 14 – 18 April

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

Dollar faces mounting pressure

George Vessey – Lead FX & Macro Strategist

The dollar remains notably stretched within the G10 basket, trading over two standard deviations above its long-term average. This context highlights the complexities behind the latest phase of dollar weakness, not merely tied to rate differentials or recession risks, but fundamentally to valuation concerns. Concurrently, the yen and Swiss franc are strengthening amid haven demand, while the euro’s resilience persists, bolstered by stable policies and consistent inflows.

The dollar is expected to face continued pressure due to mounting US growth worries and expanding speculative shorts, potentially funnelling flows into its G10 counterparts. On a broader scale, a weaker US dollar continues to ease global financial conditions, supporting risk sentiment over the long term.

The pause in reciprocal tariffs has only partially mitigated the turmoil in financial markets. Rising Treasury yields coupled with a weakening dollar reflect shifts away from USD assets. With the escalating US-China trade war fuelling global growth anxieties, attention remains fixed on negotiations and prospective central bank actions.

In the next 90 days, significant bilateral negotiations are anticipated. Japan will be the initial focus, with South Korea, Vietnam, and India – key neighboring countries of China – also prioritized. While these negotiations may eventually replace the current 10% universal tariff system, expectations are that the US weighted average tariff (excluding China) will likely remain near its present level.

This ongoing US-China trade conflict also prompts critical questions: How will the US substitute goods previously imported from China? And where will China’s redirected exports find new markets? Until markets achieve greater clarity and confidence, rebounds in risk appetite may continue to be limited in scale and duration.

Tread lightly around the bond market

Kevin Ford – FX & Macro Strategist

Remember Liz Truss, the shortest-serving Prime Minister in UK history? Her political career took a dramatic hit under the pressure of the bond market.

Truss succeeded Boris Johnson in September 2022, unveiling a bold plan to slash taxes and ramp up borrowing in hopes of spurring faster growth. But markets weren’t impressed. Her budget proposal, which would have widened the fiscal deficit, sent shockwaves through the economy. The Pound nearly hit parity with the US dollar, Gilts came under immense pressure, and the pension fund system teetered on the brink of collapse. After just 49 days of battling the bond market, Truss resigned.

Fast forward to today, and the US administration has its sights set on the 10-year Treasury yield. Scott Bessent, Howard Lutnick, and the entire economic cabinet are aligned on pushing the yield down to influence mortgages—and voters. But taming the bond market is no easy feat. Erratic policymaking, constant flip-flops, and inconsistent handling of short-term inflation expectations breed uncertainty. And when uncertainty reigns, the bond market speaks loud and clear. Tread lightly.

The 90-day pause initiated by Trump & Co. appears to echo lessons learned from Truss’s missteps. Acting swiftly, they likely recognized the impact of their strong message to global markets regarding reciprocal tariffs. But the moment arrived when they had to face reality: easing off the gas pedal was essential. Without the pause, markets could have spiraled into collapse, taking midterm ambitions down with them.

So, what’s next? Markets are waiting for President Trump and Scott Bessent to deliver tangible wins amid the chaos. If Trump aims to reduce the trade deficit, his economic team will need to bring key trading allies, such as the European Union and Japan to the table for concise trade agreements that lower effective tariff rates.

For Canada and Mexico, the waters remain murky. In two weeks, Canadians head to the polls to choose their next leader. Until then, there’s little clarity on when USMCA/CUSMA negotiations might resume to pave the way for a revamped trade deal.

Euro emerges as an attractive alternative

George Vessey – Lead FX & Macro Strategist

The euro is experiencing its fastest rally in 15 years, with some FX traders eyeing a move to $1.20. Last week, the common currency reached its strongest level in three years, fuelled by economic uncertainty stemming from US tariff policies, which have cast doubt on the dollar’s traditional haven status.

The euro has emerged as a key beneficiary of the dollar’s weakness, as investors reassess the dollar’s role in the global financial system. President Trump’s tariff rollout and escalation of the US-China trade war have further shaken market confidence. The unexpected multi-standard deviation spike in EUR/USD occurred despite higher US yields and widening real yield differentials between the US and eurozone. This movement has also driven a broad rally across most EUR crosses.

While it’s too early to declare the end of dollar dominance, recent shocks to US economic confidence have created opportunities for the euro as a cheap, liquid alternative. Risk reversal, a sentiment gauge measuring demand for currency contracts, surged last week, with one-week contracts showing the strongest bias toward a euro rally in five years. Volatility also spiked, reaching its third-highest level since 2010.

Meanwhile, on the tariff front, in response to the US administration’s 90-day pause, the European Commission delayed implementing its steel and aluminium countermeasures. However, President von der Leyen warned that if negotiations fail, the EU’s countermeasures will proceed, with preparatory work already underway.

Pound steady after jobs report

George Vessey – Lead FX & Macro Strategist

Sterling continues to flirt with $1.32 versus the US dollar, up over 2% so far this month, though GBP/EUR is down over 2% due to the huge inflows into the common currency. Sterling may find further support from here given the UK’s greater resilience to direct tariffs than the Eurozone. Indeed options traders boosted their bets on how far the British pound will rise over the coming week and month to the highest level since March 2020.

On the macro front, data this morning showed UK wage growth remained sticky in the three months leading to February, but job losses added complexity to the Bank of England’s (BoE) strategy for cutting interest rates amid the economic fallout from US tariffs. According to the Office for National Statistics, pay excluding bonuses increased to 5.9% during this period, up slightly from 5.8% through January. Private-sector wage growth, a key metric monitored by the BoE for underlying inflation pressures, came in slightly below forecasts at 5.9%.

Moreover, the labour market showed signs of softening as employers adjusted to the impact of Labour’s first budget and a bleaker economic outlook. Tax records revealed a significant decline of 78,000 payroll jobs in March, marking the most substantial drop since the pandemic.

These developments leave the BoE navigating a precarious situation, balancing persistently high wage inflation against the growing necessity to support the UK economy, as US trade policies disrupt global markets. With pay growth still exceeding the 3% level required for inflation to stabilize at the 2% target, pressure mounts even as the labour market shows signs of cooling.

GBP/USD up 3.5% in seven days

Table: 7-day currency trends and trading ranges

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 14-17

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 quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Written by the Market Insights Team

Dollar faces mounting pressure

George Vessey – Lead FX & Macro Strategist

The dollar remains notably stretched within the G10 basket, trading over two standard deviations above its long-term average. This context highlights the complexities behind the latest phase of dollar weakness, not merely tied to rate differentials or recession risks, but fundamentally to valuation concerns. Concurrently, the yen and Swiss franc are strengthening amid haven demand, while the euro’s resilience persists, bolstered by stable policies and consistent inflows.

The dollar is expected to face continued pressure due to mounting US growth worries and expanding speculative shorts, potentially funnelling flows into its G10 counterparts. On a broader scale, a weaker US dollar continues to ease global financial conditions, supporting risk sentiment over the long term.

The pause in reciprocal tariffs has only partially mitigated the turmoil in financial markets. Rising Treasury yields coupled with a weakening dollar reflect shifts away from USD assets. With the escalating US-China trade war fuelling global growth anxieties, attention remains fixed on negotiations and prospective central bank actions.

In the next 90 days, significant bilateral negotiations are anticipated. Japan will be the initial focus, with South Korea, Vietnam, and India – key neighboring countries of China – also prioritized. While these negotiations may eventually replace the current 10% universal tariff system, expectations are that the US weighted average tariff (excluding China) will likely remain near its present level.

This ongoing US-China trade conflict also prompts critical questions: How will the US substitute goods previously imported from China? And where will China’s redirected exports find new markets? Until markets achieve greater clarity and confidence, rebounds in risk appetite may continue to be limited in scale and duration.

Euro emerges as an attractive alternative

George Vessey – Lead FX & Macro Strategist

The euro is experiencing its fastest rally in 15 years, with some FX traders eyeing a move to $1.20. Last week, the common currency reached its strongest level in three years, fuelled by economic uncertainty stemming from US tariff policies, which have cast doubt on the dollar’s traditional haven status.

The euro has emerged as a key beneficiary of the dollar’s weakness, as investors reassess the dollar’s role in the global financial system. President Trump’s tariff rollout and escalation of the US-China trade war have further shaken market confidence. The unexpected multi-standard deviation spike in EUR/USD occurred despite higher US yields and widening real yield differentials between the US and eurozone. This movement has also driven a broad rally across most EUR crosses.

While it’s too early to declare the end of dollar dominance, recent shocks to US economic confidence have created opportunities for the euro as a cheap, liquid alternative. Risk reversal, a sentiment gauge measuring demand for currency contracts, surged last week, with one-week contracts showing the strongest bias toward a euro rally in five years. Volatility also spiked, reaching its third-highest level since 2010.

Meanwhile, on the tariff front, in response to the US administration’s 90-day pause, the European Commission delayed implementing its steel and aluminium countermeasures. However, President von der Leyen warned that if negotiations fail, the EU’s countermeasures will proceed, with preparatory work already underway.

Pound steady after jobs report

George Vessey – Lead FX & Macro Strategist

Sterling continues to flirt with $1.32 versus the US dollar, up over 2% so far this month, though GBP/EUR is down over 2% due to the huge inflows into the common currency. Sterling may find further support from here given the UK’s greater resilience to direct tariffs than the Eurozone. Indeed options traders boosted their bets on how far the British pound will rise over the coming week and month to the highest level since March 2020.

On the macro front, data this morning showed UK wage growth remained sticky in the three months leading to February, but job losses added complexity to the Bank of England’s (BoE) strategy for cutting interest rates amid the economic fallout from US tariffs. According to the Office for National Statistics, pay excluding bonuses increased to 5.9% during this period, up slightly from 5.8% through January. Private-sector wage growth, a key metric monitored by the BoE for underlying inflation pressures, came in slightly below forecasts at 5.9%.

Moreover, the labour market showed signs of softening as employers adjusted to the impact of Labour’s first budget and a bleaker economic outlook. Tax records revealed a significant decline of 78,000 payroll jobs in March, marking the most substantial drop since the pandemic.

These developments leave the BoE navigating a precarious situation, balancing persistently high wage inflation against the growing necessity to support the UK economy, as US trade policies disrupt global markets. With pay growth still exceeding the 3% level required for inflation to stabilize at the 2% target, pressure mounts even as the labour market shows signs of cooling.

GBP/USD up 3.5% in seven days

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: April 14-18

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.