The US dollar index fell below 100 for the first since time 2022, dropping a whopping 3% last week – as its flipped from a safe haven to more like a risk-sensitive currency. In fact, US stocks, bonds, and the dollar have all faced simultaneous declines, amplifying fears of a mass retreat by foreign investors from US assets. Trade was fears were fanned by China’s finance ministry announcing a 125% tariff on US goods, escalating retaliatory measures. Meanwhile, the US now imposes a combined 145% tariff on Chinese imports, including a 125% duty and an additional 20% levy tied to fentanyl-related trade.
On Monday, the USD was lower, despite weekend news that the Trump administration would not include key technology imports under its tariff regime. The exemption covers mobile phones, computers and some semiconductors including Chinese imports.
Last week was a rollercoaster week for markets. Equities, slumped, pumped and slumped again on tariff-related headlines. Long-dated Treasury yields spiked, while the dollar has experienced its steepest drop against the euro and Swiss franc in a decade. Once considered the ultimate safe haven, US Treasury bonds are now under scrutiny as President Trump’s aggressive trade policies disrupt global markets. The introduction of reciprocal tariffs rapidly shifted the dollar’s status from a favoured currency to a gauge of risk aversion, reflecting growing uncertainty and diminishing confidence in US financial stability. Indeed, the inverse correlation between US yields and the dollar highlights this stark regime shift, but how long could it last?
At this point, trying to predict a bottom for the dollar is as uncertain as forecasting President Trump’s next tariff decision. The dollar, much like Treasuries, has shifted from its traditional role as a safe haven to behaving like a risk-sensitive asset. This dynamic means the USD can rally alongside struggling equities if there’s even a glimmer of positive trade news. However, it seems that only a significant rollback of protectionist policies—especially those targeting China—can truly repair the damage inflicted on the dollar over the past two weeks.
Euro has flipped from risk asset to safe haven
The euro continues to attract substantial USD outflows, allowing EUR/USD to hit a fresh three-year high above $1.14 recently. Last week we saw the pair rally over 4% in two days – its best two-day streak since 2009.
Its appeal as a liquid reserve currency, combined with market optimism that the EU will avoid escalating trade tensions with the US, has buoyed its performance alongside Europe’s current account surplus and German’s historic spending plans.
However, much of the recent surge is largely driven by weakening confidence in the dollar, with little justification from short-term rate dynamics. Notably, the EUR-USD two-year swap rate gap has widened further in favour of the dollar, suggesting a fair value closer to $1.05. That said, given the extreme volatility and unconventional trends, such calculations require caution. Markets are pricing in a 95% chance of a rate cut by the European Central Bank this week. A surprise hold could see the pair shoot above $1.15 especially amidst ongoing volatility and thin liquidity in the FX space.
Pound plagued by volatility
The British pound surged past $1.30 and peaked over $1.31 versus the US dollar last Friday, nearing a six-month high as the dollar confidence crisis gathered steam. However, with enhanced flows into the euro, GBP/EUR sunk below €1.15 for the first time since late 2023. This month alone, the pair has dropped 3.6% – on track for its largest monthly decline since 2016 and diverging (in a big way) from UK-German real rate differentials.
On the macro front, UK GDP surprised to the upside with 0.5% growth in February – five times the forecasted rate. This growth, supported by contributions from all major sectors, was bolstered by stronger factory output, likely driven by stockpiling ahead of President Trump’s new tariff measures.
The upbeat economic data slightly tempered expectations for aggressive Bank of England rate cuts, though markets still anticipate three quarter-point reductions in 2025.
This week, FX markets will be hoping for a breather after last week’s heightened volatility. Attention might divert towards macro data again, with the labour market and inflation reports from the UK top on the domestic docket.
USD opens lower despite tariff relief
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 Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD continues to weaken amid soft US data
The USD index (DXY) fell 1.0% on Friday to 99.87, its lowest level since 2022, following softer-than-expected US PPI data and dovish Fed commentary.
Risk-on sentiment in global markets buoyed high-beta currencies, while expectations of policy stability weighed on the greenback.
The Aussie rallied 1.1% to finish at 0.629 on Friday’s close, as commodity-linked currencies benefitted from broad USD weakness and a rebound in oil prices (+2.3%).
However, gains remain capped by concerns over soft Chinese growth and subdued domestic fundamentals.
AUD/USD, in a clear downtrend, has spent 84% year-to-date below the 0.63 handle threshold.
The Kiwi outperformed, rising 1.5% to 0.583, driven by dovish RBNZ rate expectations ahead of New Zealand’s Q1 CPI release on April 17 (8.45am AEST). Broader USD weakness also supported the pair.
NZD/USD, also in a clear downtrend, has spent 78% year-to-date below 0.57 handle threshold.
Aussie and Kiwi sellers may look to take advantage of recent strength in both pairs.
Fed ‘absolutely’ ready to stabilise market, says Collins
The Fed “would absolutely be prepared” to stabilise financial markets in the event that they were turbulent, according to Boston Fed President Susan Collins.
“Markets are continuing to function well” at the moment, she continued, and “we’re not seeing liquidity concerns overall”
Looking at APAC FX, the Singapore dollar appreciated 0.9% to 1.319 on Friday close ahead of the MAS monetary policy announcement on April 14.
A neutral or tightening bias is widely anticipated, with the SGD further supported by regional economic stability and rising short-term rates.
USD/SGD is now only 0.4% above its 5-month low.
Inflation and central bank policy dominate focus
The upcoming week features key inflation readings from major economies. In the UK, CPI data for March will be released on Wednesday, with the prior YoY figure recorded at 2.8%. The Eurozone will also release finalized inflation data for March on the same day, with headline CPI consensus expectations at 2.2% YoY and MoM at 0.6%. In Canada, March’s CPI data is due Tuesday, with the prior YoY figure at 2.6% and MoM at 1.1%. These releases will provide insights into inflation trends and their potential impact on monetary policy.
China’s GDP for Q1 2025 will take center stage this week, with the prior YoY growth rate recorded at 5.4%. Accompanying this report are March’s industrial production and retail sales figures, scheduled for release on Wednesday. Industrial production YoY was previously recorded at 5.6%, while retail sales YoY stood at 4.2%. In the US, retail sales data for March will be released on Wednesday, with the prior MoM figure at 0.2%. Additionally, the Empire Manufacturing Index (April) and industrial production data (March) will provide further insights into US economic activity.
The Bank of Canada is scheduled to announce its interest rate decision on Wednesday, with the current policy rate at 2.75%. On Thursday, the European Central Bank will deliver its rate decisions, with the deposit facility rate previously at 2.50% and the main refinancing rate at 2.65%. These decisions will be closely monitored for their implications on EUR and CAD currency pairs.
Key labor market updates are expected from the UK and Australia. On Tuesday, the UK will release its February unemployment rate, previously recorded at 4.4%, and March jobless claims change, which was last reported at 44.2k. Australia will release its March employment report on Thursday, with the prior unemployment rate at 4.1% and employment change showing a decline of 52.8k.
Antipodeans near the top end of trading range
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.
Global markets were sent on a roller-coaster ride as investors first sent markets lower after the larger-than-expected tariff announcement from US President Donald Trump before Wednesday’s announcement of a pause sent equity markets surging.
Initially, global markets fell, with the US’s S&P 500’s 10.6% two-day loss after the tariff announcement the largest two-day fall since the initial Covid sell-off in March 2020. At its worst, the S&P 500 fell as much as 14.6% after the announcement.
Other markets were also shaken. The US ten-year bond yield fell from 4.13% to 3.85% while crude oil fell 24%.
Mid-week, the moves pushed to an extreme. Most notably, a turn in the US bond market saw the ten-year bond yield surge back to 4.51% from the 3.85% lows in just three trading sessions – a bond market move comparable to British prime minister Liz Truss’s last days.
The market action forced a re-think. US President Donald Trump announced a 90-day pause in the implementation of the most severe tariffs on the majority of trading partners, but raised tariffs on China to 145%. The benchmark S&P 500 jumped a massive 9.5% in the index’s eighth-best percentage performance in history and the best outside of the Great Depression and Global Financial Crisis eras.
FX markets followed a similar trajectory. However, key moves signalled that the last ten days might have long-term structural impact. The US dollar mostly weakened, losing its safe-haven status, while the euro, yen and swissy outperformed. The CAD and AUD also gained.
Global Macro Biggest policy reversal in history
Trump yields to Treasury market. Before the sun set on “reciprocal tariff day” Trump announced a 90-day pause on tariffs for most countries, which saw stock markets roar back with a vengeance. Part of the Trump Administrations’ plan was to get rates down, but with long-end yields surging higher on stagflation fears, the White House went from declaring no exemptions, no pauses and negotiations one country at a time to eliminate every trade deficit – to a 90-day pause with tariffs dropping to 10% on the majority of the countries on the original list. Apart from China that is. China now faces 145% levies on all goods exports in response to an earlier move by Beijing.
Bond sell-off went too far. A mass departure from longer-dated US Treasuries drove yields sharply higher, triggering the most significant selloff in these so-called safe assets since 2020. Rising borrowing costs were delivering yet another blow to the global economy, already strained by President Trump’s aggressive tariff policies. Higher yields, impacting everything from mortgages to loan rates, are undermining a key objective of Trump’s economic policy – lowering borrowing costs to benefit consumers, as highlighted by Treasury Secretary Scott Bessent.
US dollar weakness. The US dollar can’t recover its safe-haven status. Instead, it has weakened as credibility around policymaking weighs on the greenback. Frequent policy changes and the uncertainty the Trump administration has created are causing harm across the board – from the US economy, its global standing to stock markets and the US dollar.
FX markets remain on edge. Safe havens faced significant selling pressure following the pause announcement, while EM and commodity-linked currencies, previously targeted amid a global trade war, made a robust recovery. However, as the week draws to a close, the flight to quality has re-emerged, exposing the vulnerabilities of cyclical currencies. Meanwhile, the year’s top-performing currencies have maintained their impressive upward momentum.
Week ahead Inflation and central bank policy dominate focus
Inflation data. The upcoming week features key inflation readings from major economies. In the UK, CPI data for March will be released on Wednesday, with the prior YoY figure recorded at 2.8%. The Eurozone will also release finalized inflation data for March on the same day, with headline CPI consensus expectations at 2.2% YoY and MoM at 0.6%. In Canada, March’s CPI data is due Tuesday, with the prior YoY figure at 2.6% and MoM at 1.1%. These releases will provide insights into inflation trends and their potential impact on monetary policy.
Growth indicators. China’s GDP for Q1 2025 will take center stage this week, with the prior YoY growth rate recorded at 5.4%. Accompanying this report are March’s industrial production and retail sales figures, scheduled for release on Wednesday. Industrial production YoY was previously recorded at 5.6%, while retail sales YoY stood at 4.2%. In the US, retail sales data for March will be released on Wednesday, with the prior MoM figure at 0.2%. Additionally, the Empire Manufacturing Index (April) and industrial production data (March) will provide further insights into US economic activity.
Central bank decisions. The Bank of Canada is scheduled to announce its interest rate decision on Wednesday, with the current policy rate at 2.75%. On Thursday, the European Central Bank will deliver its rate decision, with the deposit facility rate previously at 2.50% and the main refinancing rate at 2.65%. These decisions will be closely monitored for their implications on EUR and CAD currency pairs.
Key labor market updates. On Tuesday, the UK will release its February jobs report, with most focus on private sector wage growth figures. Australia will release its March employment report on Thursday, with the prior unemployment rate at 4.1% and employment change showing a decline of 52.8k.
FX Views Confidence crisis: traders ditch dollar
USD From safe haven to risk asset. The USD index is around 6-month lows and has dropped a whopping 2.6% this week – its worst weekly performance since late 2022. US stocks, bonds, and the dollar have all faced simultaneous declines, amplifying fears of a mass retreat by foreign investors from US assets. Long-dated Treasury yields have spiked, while the dollar has experienced its steepest drop against the euro and Swiss franc in a decade. Once considered the ultimate safe haven, US Treasury bonds are now under scrutiny as President Trump’s aggressive trade policies disrupt global markets. The introduction of reciprocal tariffs earlier this month has rapidly shifted the dollar’s status from a favoured currency to a gauge of risk aversion, reflecting growing uncertainty and diminishing confidence in US financial stability.
EUR Surges to 3-year high. The euro’s high liquidity and backed by a current account surplus continues to shield it from heightened volatility seen in high beta G10 peers. Being the second most liquid currency in the world and a preferred alternative to the dollar for FX reserves, the euro remains in a good position to benefit from any USD confidence crisis. Indeed, EUR/USD is on track for a second straight week of gains, up almost 4% over the period and over 11% from February lows. After Trump’s tariff pause, the pair dropped 1% but the common currency erased losses on the news the EU was also mulling a hold on its proposed countermeasure. Fair value is highly reliant on the two-year swap rate differential and purely from a rates perspective, EUR/USD looks overvalued given the ECB looks increasingly likely to cut next week, while the Fed still hasn’t given any signal to justify more easing. At first glance, there is probably a slightly downside-tilted risk for the pair, especially as it’s overbought. That said, if the ECB holds rates, the euro might get an additional shot in the arm. In fact, options traders are the most bullish on the euro in five years according to 1-month risk reversals.
GBP Gilt market is an Achilles heel. Sterling is becoming increasingly sensitive to market risk. No longer is it being dubbed a tariff safe haven. It continues to fluctuate against most of its peers in line with broader market sentiment and because the UK will not come away unharmed by a global trade war and economic slowdown. But the rebound in risk appetite after Trump’s tariff pause sent GBP/USD soaring around 2% in two days – back towards $1.30. Another key talking point this week was the meltdown in UK gilts though. The exaggerated moves in gilts, especially compared to Treasuries, suggests that there is pronounced stress out there. The UK’s finances are particularly vulnerable to moves at the longer end of the curve, and 30-year gilt yields jumped to 1998 highs this week. Usually, currencies move in tandem with yields, but the pound was declining in a sign that the gilt market remains an Achilles heel for sterling. Indeed, despite the 1-week change in UK-German yield spreads jumping by the most in two years, GBP/EUR’s 1-week change has been the biggest drop in three years. UK inflation data next week will also test the gilt market and the pound, especially if it prints higher than expected.
CHF Approaching intervention levels. The Swiss franc is experiencing a surge in demand, sparking speculation that the Swiss National Bank (SNB) may need to intervene or even push interest rates into negative territory to curb its rapid appreciation. The former runs the risk of it earning Trump’s ire given he already labeled the Swiss as currency manipulators in 2020. Still, the SNB might have to rein in further strength as the franc has emerged as the top-performing major currency, driven by a flight to safety. On a trade-weighted basis, the franc is nearing levels last seen in late 2023, a period when the SNB signaled its willingness to act against excessive currency strength. Meanwhile, the options market indicates further potential for the franc to strengthen, though Trump’s pause has eased such speculation for now.
CNYUS-China tariffs escalate, volatile moves ahead. The US has clarified that tariffs on Chinese imports now total at least 145%, escalating trade tensions and adding to global economic uncertainty. China’s retaliatory measures, including significant tariffs on US goods, further highlight the strained relationship between the two largest economies. USD/CNH is testing resistance near 7.3500, a key level that could pave the way for further upside if breached. However, state bank intervention may limit excessive volatility. On the downside, support is seen at 7.2500, with a deeper pullback potentially targeting 7.2000. Key Chinese economic data, including GDP, industrial production, and retail sales, will provide insights into the broader impact of tariffs, while US-China trade developments will remain a key driver for the pair.
JPY BoJ’s Ueda signals data-dependent approach as Yen nears key support. BoJ Governor Kazuo Ueda has reiterated the central bank’s commitment to a data-driven approach, stating that rate hikes remain on the table if economic recovery continues. However, he also highlighted the need to monitor risks tied to global trade policies and macroeconomic uncertainties. This cautious stance suggests the BoJ is unlikely to make abrupt policy changes in the near term. USD/JPY is approaching a critical support zone near 140.00, which aligns with the 38.2% Fibonacci retracement of the 2020 rally and the lower boundary of its multi-year trading range. A break below this level could trigger further downside toward 138.50. On the upside, resistance is seen at 146.50, with medium-term resistance near the 150.50-151.50 zone. Japanese data releases, including industrial production, trade balance, and CPI figures, will be pivotal in shaping near-term yen dynamics and influencing the BoJ’s policy outlook.
CADThe 1.40 is here. Trump’s 90-day pause has offered some relief, easing tariff pressures on currencies like USD/CAD. However, fundamentally the CAD remains vulnerable as a cyclical currency, affected by lower commodity prices, global recession fears, and lingering tariffs. Tariffs still apply to CUSMA/USCMA non-compliant goods, steel, and aluminum, with auto tariffs set to expand in early May. On the macro side, tariff-related uncertainty has already negatively impacted the data, as reflected in the Bank of Canada’s Q1 business outlook survey.
Even as risk-off sentiment resurfaced to wrap up the week, the USD/CAD found itself drawn toward robust support zones in the 1.405–1.41 range. The Loonie traded this week as high as 1.429, ultimately, breaking the 40-week SMA and the crucial multi-year support level at 1.40, aligning with the 200-day SMA. Should it close below this threshold, further downside toward 1.394 becomes likely, though the current move appears overstretched in the short-term.
AUD RBA’s Bullock maintains cautious tone amid rising economic uncertainty. RBA Governor Michele Bullock has emphasized patience in assessing the economic impact of global trade tensions and domestic conditions, signaling that deep rate cuts are not imminent. The central bank remains focused on its dual mandate of price stability and full employment, while acknowledging the challenges posed by external shocks, including US trade policy measures. This cautious stance suggests the RBA is in no rush to adjust its policy trajectory. AUD/USD faced strong resistance near 0.6400 last week, retreating as risk-off sentiment dominated markets. The pair remains vulnerable to further downside, with key support levels seen in the 0.6000-0.6050 range. Momentum indicators suggest negative pressure persists, with no clear signs of reversal yet. Upcoming data, including RBA meeting minutes, unemployment figures, and labor force participation rates, will be critical in shaping expectations for the RBA’s next moves and the AUD’s direction.
MXNRisk-off hits the Peso. Speculation against emerging market currencies propelled the peso above the critical 21-resistance level, underscoring the profound influence of deteriorating global risk sentiment. Currencies like the Brazilian real, Colombian peso, and Mexican peso have remained closely tied to sentiment in the U.S. stock market, reflecting their reliance on the broader trajectory of risk assets. While the Mexican peso briefly breached the 21 threshold—a level last reached in February and before that in July 2022—it quickly retreated to 20.1.
After this volatile week, the peso’s vulnerabilities to worsening global risk sentiment and external pressures have become increasingly evident. Over the next 90 days, its trajectory will likely remain closely tied to shifts in risk assets and broader financial market conditions.
If speculation against emerging market currencies continues, the peso may gain momentum above 21. However, throughout 2025, the area above 20.8 has failed to hold, with range-bound trading persisting. A decline in sentiment toward emerging markets could push the peso beyond its 2025 trading range. Short-term directions points to 20.4, with resistance at 20.7/8.
*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.
During periods of market stress, like the Great Financial Crisis (GFC) in 2007 or the Covid-19 shutdown, equities tended to sell off while the US dollar gained strength as investors turned to safe-haven assets. Traditionally, this created a negative correlation between equities and the greenback. However, that relationship has shifter. President Trump’s policy reversals, combined with growing uncertainty and tariff-related tensions, have caused the US dollar and US assets to behave more like risky assets, resembling those of emerging markets.
The weaker dollar brings its own set of challenges. While the Fed’s preferred inflation metric eased to 2.8% year-over-year in March, down from 3.1% in February, a combination of a declining USD and a 10% tariff could reignite inflationary pressures in the second half of 2025. Minneapolis Fed President Neel Kashkari highlighted that tariffs have raised the bar for adjusting interest rates, even in the face of rising unemployment. As Kashkari noted, “in my view, the hurdle to change the federal funds rate one way or the other has increased due to the tariffs.”
This perspective contrasts with Scott Bessent’s remarks during his January confirmation hearing for Treasury Secretary. Bessent argued that a 10% tariff could lead to a 4% appreciation in the dollar, effectively offsetting the tariff’s impact on consumers. The US Dollar index has lost 9% over the past 3 months.
Meanwhile, the Canadian dollar has capitalized on the dollar’s struggles. Even as risk-off sentiment resurfaced late in the week, the USD/CAD pair gravitated toward strong support levels in the 1.405–1.41 range, later breaking the critical multi-year support level at 1.40, where the 200-day SMA sits. Now it has closed below this threshold, making a low of 1.384, level not seen since November 2024. Further downside towards 1.38 seems plausible, though the current move appears overstretched in the short term.
Dovish Banxico
Kevin Ford – FX & Macro Strategist
According to the minutes from the March 26, 2025, meeting of the Banco de México Governing Board, the early months of 2025 witnessed a moderation in economic activity, with both advanced and emerging economies experiencing reduced momentum. Growth projections have been scaled back, leaning towards a pessimistic outlook as risks accumulate.
Domestically, the Mexican economy is facing its own share of challenges. A slowdown persisted into the first quarter of 2025, following contractions in agriculture, industry, and other sectors during the final months of 2024. This dip in activity has spilled over into domestic demand, with both consumption and investment taking a hit. Although manufacturing exports have shown some signs of recovery, the labor market remains under pressure, with fewer jobs being created and formal employment declining.
Inflation figures for March 2025 revealed a headline rate of 3.67%, driven by fluctuations in services and merchandise prices. While Banxico foresees inflation converging to its target of 3% by late 2026, risks persist, stemming from broader economic weakness. Against this backdrop, the Governing Board unanimously decided to lower the interbank interest rate by 50 basis points to 9.00%. This move aims to balance inflationary concerns with a need to invigorate economic growth, paving the way for potential rate cuts while maintaining vigilance over inflation.
Adding complexity to the mix are uncertainties tied to U.S. trade policies and tariff measures, which could exert pressure on both inflation and Mexico’s economic performance. On a brighter note, Mexico’s peso appreciated slightly, and government bond yields dipped, signaling relative stability in financial markets despite looming uncertainties.
Through these discussions, Banxico reaffirmed its commitment to curbing inflation and supporting economic stability, even as the global and domestic landscapes present mounting challenges.
Banxico is likely to lower rates by 50 basis points in May and June, and then by 25 basis points in August and September. By the end of the year, the reference rate could reach 7.50%. However, these cuts will largely depend on how many times the Federal Reserve reduces rates this year.
Euro soars to 3-year high
George Vessey – Lead FX & Macro Strategist
The euro surged to a three-year high against the US dollar amid tariff-driven market volatility, as investors offloaded US assets and sought safety in haven currencies backed by current account surpluses. There could be scope for more upside too as FX options traders are the most bullish on the euro in five years according to 1-month risk reversals.
As well as traders offloading US assets, the European Union’s measured approach in the global trade war is also bolstering the euro’s prospects. EUR/USD surged over 2% on Thursday – its largest daily gain since 2015. This rally aligns with news that the EU may delay its countermeasures to US tariffs, just as President Trump announced a pause on tariffs against most nations. Earlier, the EU had approved tariffs targeting €21 billion worth of US imports.
This de-escalation could ease tensions between the US and EU, reducing the European Central Bank’s (ECB) urgency to cut rates at its upcoming meeting. The ECB has already reduced its benchmark rate by 150 basis points in this cycle, and markets are pricing an over 90% chance of another cut next week. If the ECB holds steady, the euro could gain further support.
Pound eyes worst week since 2022 versus euro
George Vessey – Lead FX & Macro Strategist
Sterling is back up above $1.30 versus the US dollar, around 1% higher on the week as investors continue to shun US assets. However, a parabolic rise in the euro, helped by its current account surplus – is dragging GBP/EUR to its worst week since 2022. Stronger-than-expected UK GDP data this morning should offer some support to the pound in the short term.
The UK economy surprised analysts by growing 0.5% in February, as reported by the Office for National Statistics. This rebound follows a slight contraction in January and offers a temporary boost for Chancellor Rachel Reeves amid looming concerns over the impact of President Trump’s tariff policies. The growth in February may represent a fleeting moment of expansion, with the global trade war expected to weigh heavily on business investment and consumer spending in the coming months.
Meanwhile, as we highlighted might happen yesterday, the Bank of England has dropped plans to sell down its stock of long-dated bonds next week in response to recent market turmoil and will instead sell shorter maturity gilts, a move that will ease pressure on the UK’s long-term borrowing costs. The announcement on Thursday follows a sharp sell-off in the price of UK sovereign bonds with 10- and 30-year maturities, which sent yields soaring to 27-year highs.
Usually, currencies move in tandem with yields, but the pound was declining in a sign that the gilt market remains an Achilles heel for sterling. Indeed, despite the 1-week change in UK-German yield spreads jumping by the most in two years, GBP/EUR’s 1-week change has been the biggest drop in three years. UK inflation data next week will further test the gilt market and the pound, especially if it prints higher than expected.
*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.
Traders continue to fixate on President Trump’s tariffs and their potential hit to global growth. Following one of the largest surges in 10-year Treasury yields in history and trillions erased from the stock market, Trump surrendered to market forces with a 90-day pause on “reciprocal” tariffs”. Most countries, bar Mexico, Canada and China face 10% levies for now.
This initially sparked an historic relief rally on Wednesday, however, given the impact on economies and the world at large is entirely unpredictable, equities resumed their decline yesterday – the S&P500 sinking around 4%. Oil prices also slumped 5% on demand fears, they’ve swung 21% over the last seven trading days. Meanwhile, the US dollar index fell by 2% – its biggest daily fall in over two years – unable to benefit from rising trading yields as traders dump US assets in tandem. The Swiss franc jumped 3% thanks to its safe haven appeal, and the euro also outshined – more on that below.
Risk appetite wasn’t helped by the fact the White House confirmed the 125% tariff on China actually comes on top of a 20% fentanyl-related tariff imposed earlier this year – meaning that the overall tariff imposed on most goods imported from China stands at 145%.
The bottom line is investors remain concerned an escalation of the trade war between the world’s two biggest economies will bring lasting damage to global growth. Moreover, the tariff pause is really only extending the uncertainty that has already begun to drag on business and consumer sentiment. The path forward likely includes more market swings as we do not have a conclusion.
Euro soars to 3-year high
George Vessey – Lead FX & Macro Strategist
The euro surged to a three-year high against the US dollar amid tariff-driven market volatility, as investors offloaded US assets and sought safety in haven currencies backed by current account surpluses.
As well as traders offloading US assets, the European Union’s measured approach in the global trade war is also bolstering the euro’s prospects. EUR/USD surged over 2% on Thursday – its largest daily gain since 2015. This rally aligns with news that the EU may delay its countermeasures to US tariffs, just as President Trump announced a pause on tariffs against most nations. Earlier, the EU had approved tariffs targeting €21 billion worth of US imports.
This de-escalation could ease tensions between the US and EU, reducing the European Central Bank’s (ECB) urgency to cut rates at its upcoming meeting. The ECB has already reduced its benchmark rate by 150 basis points in this cycle, and markets are pricing an over 90% chance of another cut next week. If the ECB holds steady, the euro could gain further support.
US inflation relief
On the macro front, the latest US CPI data offered a glimmer of hope, easing fears of pre-tariff inflation levels and bolstering expectations for future rate cuts after the historic yield spike. This has provided near-term support for bonds. However, higher prices stemming from tariffs and supply chain disruptions loom, with stagflation remaining a significant challenge.
This scenario is likely to keep the Federal Reserve on hold and push yields higher in the coming weeks. A projection of three to four rate cuts this year seems plausible given the deteriorating growth outlook and anticipated softer inflation figures in 2026.
Fed minutes released Wednesday also revealed that officials were already concerned about stagflation prior to the tariff measures. Inflation has remained above target since March 2021, and the prolonged period of elevated inflation, coupled with tariff-induced price shocks, risks destabilizing inflation expectations. This suggests the Fed may maintain steady rates for the foreseeable future as it assesses the full impact of Trump’s policy changes.
Pound eyes worst week since 2022 versus euro
George Vessey – Lead FX & Macro Strategist
Sterling is back up above $1.30 versus the US dollar, around 1% higher on the week as investors continue to shun US assets. However, a parabolic rise in the euro, helped by its current account surplus – is dragging GBP/EUR to its worst week since 2022. Stronger-than-expected UK GDP data this morning should offer some meaningful support to the pound in the short term.
The UK economy surprised analysts by growing 0.5% in February, as reported by the Office for National Statistics. This rebound follows a slight contraction in January and offers a temporary boost for Chancellor Rachel Reeves amid looming concerns over the impact of President Trump’s tariff policies. The growth in February may represent a fleeting moment of expansion, with the global trade war expected to weigh heavily on business investment and consumer spending in the coming months.
Meanwhile, as we highlighted might happen yesterday, the Bank of England has dropped plans to sell down its stock of long-dated bonds next week in response to recent market turmoil and will instead sell shorter maturity gilts, a move that will ease pressure on the UK’s long-term borrowing costs. The announcement on Thursday follows a sharp sell-off in the price of UK sovereign bonds with 10- and 30-year maturities in the wake of US President Donald Trump’s jarring imposition of global tariffs.
Usually, currencies move in tandem with yields, but the pound was declining in a sign that the gilt market remains an Achilles heel for sterling. Indeed, despite the 1-week change in UK-German yield spreads jumping by the most in two years, GBP/EUR’s 1-week change has been the biggest drop in three years. UK inflation data next week will also test the gilt market and the pound, especially if it prints higher than expected.
*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
China faces steep US tariffs as markets show resilience
The USD weakened broadly as risk-off sentiment dominated markets amid escalating US-China trade tensions.
The USD index dipped below 101.00 before firming slightly higher by the New York close, extending its decline against most currencies.
The euro was a standout performer, climbing more than 2% to 1.1190, supported by the EU’s decision to delay metal counter-tariffs for 90 days.
The Chinese yuan displayed surprising strength despite confirmation of a 145% US tariff (125% reciprocal + 20% fentanyl), with USDCNH falling 0.45% to 7.3130 during New York hours.
The Australian dollar experienced choppy trading between 0.6180 and 0.6250 throughout the New York session.
In safe havens, the Swiss franc surged 4% while Japanese yen made modest gains as investors sought protection from market volatility.
The S&P 500 fell 3.5% and the tech-heavy Nasdaq dropped 4%, with US Treasury yields rising at the long end despite a strong 30-year bond auction.
US CPI drops below consensus expectations
US inflation came in surprisingly low for March, with headline CPI decreasing 0.05% month-over-month and core CPI rising just 0.06% – both significantly below market consensus.
While housing costs continued to climb with Owner’s Equivalent Rent reaching its highest level since October, this was offset by decreases in transportation services (-1.4%) and used car prices (-0.7%).
For USD/SGD in APAC FX, the pair has corrected to near five-month lows, and the next key support lies at 1.3268.
Conversely, next daily key resistance lies at 200-day EMA of 1.3398, where SGD buyers may look to take advantage.
Aussie jumps on trade pause, but risks remain
The AUD/USD jumped around 5.0% from its Wednesday lows after President Trump’s decision to pause the “reciprocal” components of his tariff plan.
However, risks clearly remain for the Australian dollar. The Aussie’s recent underperformance during the market’s trade worries is similar to its struggles during the US-China trade war in 2018-19.
During that period, between the January 2018 initial tariff announcement on solar panels and washing machines to the January 2020 “phase one” agreement, the AUD/USD fell from above 0.8000 to below 0.6700.
For now, in the short term, markets will be looking to the key technical level at 0.6200. While the AUD/USD remains below this level, the Aussie will be pressured. A move above this level turns the outlook more positive.
Antipodeans up overnight
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.
Market sentiment has largely hinged on interventions by J. Powell or Trump. Last Friday, the Fed Chair showed little inclination toward a more dovish stance, leaving inflation concerns unresolved. With inflation still a pressing issue and the global trade war persisting, risks remain elevated. On the other hand, President Trump followed a patter seen in his first presidency; drastic move, reaction tracked, allies puzzled, course reversed.
Trump’s 90-day pause has offered some relief, easing tariff pressures on currencies like USD/CAD. Without the risk-off sentiment, USD/CAD is gravitating toward strong support levels between 1.405 and 1.41, approaching the critical multi-year support at 1.40.
Canada, notably, avoided reciprocal tariffs last week, which could reduce economic strain and create potential upside from redirected U.S. demand. However, the CAD remains vulnerable as a cyclical currency, affected by lower commodity prices, global recession fears, and lingering tariffs. Tariffs still apply to CUSMA/USCMA non-compliant goods, steel, and aluminum, with auto tariffs set to expand in early May.
Tariff-related uncertainty has already negatively impacted macroeconomic data, as reflected in the Bank of Canada’s Q1 business outlook survey. While Canada is among the few nations imposing retaliatory tariffs, this approach risks escalating trade tensions further.
For the CAD, stock reflation provides some relief, but this is far from a decisive recovery. Trade policy remains largely unchanged, with the effective tariff rate holding steady despite today’s announcement. While pressure on China has intensified, it has eased for other nations. Although a U.S. recession isn’t imminent, its occurrence would likely have significant repercussions for the Canadian economy.
LATAM currencies on the brink
Kevin Ford – FX & Macro Strategist
Yesterday, speculation against emerging market currencies propelled the peso above the critical 21-resistance level, underscoring the profound influence of deteriorating global risk sentiment. Currencies like the Brazilian real, Colombian peso, and Mexican peso have remained closely tied to sentiment in the U.S. stock market, reflecting their reliance on the broader trajectory of risk assets. While the Mexican peso briefly breached the 21 threshold—a level last reached in February and before that in July 2022—it quickly retreated to 20.1.
The announcement of a 90-day pause on reciprocal tariffs by President Trump provided the peso with temporary relief. However, as no changes were made to existing tariffs on Mexico, the broader impact didn’t allow the peso to break away from its 2025 trading range. Market sentiment toward emerging markets continues to play a major role in shaping Latin American currencies, including the peso. A mix of factors—such as a sell-off in U.S. Treasuries, a weakening dollar, and a decline in U.S. equities—has strained the peso’s ability to navigate ongoing tariff tensions effectively.
Despite Mexico successfully avoiding reciprocal tariffs last week, the peso faces significant challenges ahead. Key risks include the possibility of a U.S. recession, the gradual erosion of carry trade appeal, and lingering uncertainty surrounding the renegotiation of the CUSMA/USMCA agreement. The Mexican peso remains highly exposed to worries surrounding a deepening economic slowdown in the United States.
After this volatile week, the peso’s vulnerabilities to worsening global risk sentiment and external pressures have become increasingly evident. Over the next 90 days, its trajectory will likely remain closely tied to shifts in risk assets and broader financial market conditions.
Biggest policy reversal in history
George Vessey – Lead FX & Macro Strategist
It was only a matter of time before markets forced the hand of President Trump. The plunge in equities, including a 20% drawdown in the Nasdaq, left Trump unfazed, holding firm on his aggressive tariff policies. However, it appears it was the intense selloff in US bonds this week that prompted the President to execute one of the biggest economic policy reversals in modern history.
Before the sun set on “reciprocal tariff day” Trump announced a 90-day pause on tariffs for most countries, which saw stock markets roar back with a vengeance. The S&P500 surged over 9% and the Nasdaq over 12% – both staging one of their biggest one-day gains on record. The Magnificent Seven surged as much as 11%, the largest gain since the index’s creation in 2015. Curiously, the recovery in stocks came about three hours after Trump urged Americans to stay calm and continue investing…
Part of the Trump Administrations’ plan was to get rates down, but with long-end yields surging higher on stagflation fears, the White House went from declaring no exemptions, no pauses and negotiations one country at a time to eliminate every trade deficit – to a 90-day pause with tariffs dropping to 10% on the majority of the countries on the original list. Apart from China that is. China now faces 125% levies on all goods exports in response to an earlier move by Beijing.
The tariff pause allows for strategic negotiations, which is good news, but the most critical factor for the global economy remains in escalation mode – this trade war is really only about the US versus China. Will Xi reverse course in attempt to de-escalate? Moreover, markets may be overlooking the fact that a 10% tariff on everything isn’t nothing, and the reality is more uncertainty, and a lack of clarity, for the next three months.
FX markets remain on edge. Safe havens have been sold heavily on the pause news, while those EM and commodity-linked currencies in the firing line of a global trade war have come back strongly. Overnight volatility in the major currencies remains elevated despite tariff reprieve as traders turn focus to today’s release of US inflation data.
Pound recovers with equities, but bonds pose a problem
George Vessey – Lead FX & Macro Strategist
Stress in the bond markets has been evident in the UK too. Yields were rising as worryingly as they were doing in the US, posing a headache for the UK government’s finances, which is already challenged by tight public finances and a weakening growth outlook. The Bank of England (BoE) has stated the global risk environment has deteriorated, and uncertainty has intensified. The pound has had a torrid week against most peers, especially the yen and swissy, down 2% and 3% respectively before the tariff delay was announced, sparking a rapid reversal.
What’s interesting is the divergence in yields across the curve. Long-dated yields are rising amid renewed inflation fears driven by escalating US-China trade tensions. For example, the UK’s 30-year gilt yield, rose to its highest level since 1998. In contrast, fears of an economic slowdown has left the 2-year yield relatively unchanged as investors ramp up bets on BoE rate cuts. Markets now price in 71bps of easing this year, though this is less than the 93bps priced in at one point yesterday. Meanwhile, if the BoE determines the gilt market is becoming dysfunctional, it may be forced to pause its bond selling programme. For now, the tariff pause looks to have provided some reprieve though.
What about the pound? The relief rally in global equity markets, and prospect for stabilization in the UK bond market, is fuel for a recovery in the UK currency. GBP/USD is back above $1.28 as risk appetite returns, but the big talking point is GBP/EUR which had suffered its biggest 5-day drop since 2020 and was trading near 1-year lows as traders flocked to the high-liquid appeal of the euro. The pair sharply went into reverse though and is now trading back above €1.17 following Trump’s capitulation to market forces.
*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.
It was only a matter of time before markets forced the hand of President Trump. The plunge in equities, including a 20% drawdown in the Nasdaq, left Trump unfazed, holding firm on his aggressive tariff policies. However, it appears it was the intense selloff in US bonds this week that prompted the President to execute one of the biggest economic policy reversals in modern history.
Before the sun set on “reciprocal tariff day” Trump announced a 90-day pause on tariffs for most countries, which saw stock markets roar back with a vengeance. The S&P500 surged over 9% and the Nasdaq over 12% – both staging one of their biggest one-day gains on record. The Magnificent Seven surged as much as 11%, the largest gain since the index’s creation in 2015. Curiously, the recovery in stocks came about three hours after Trump urged Americans to stay calm and continue investing…
Part of the Trump Administrations’ plan was to get rates down, but with long-end yields surging higher on stagflation fears, the White House went from declaring no exemptions, no pauses and negotiations one country at a time to eliminate every trade deficit – to a 90-day pause with tariffs dropping to 10% on the majority of the countries on the original list. Apart from China that is. China now faces 125% levies on all goods exports in response to an earlier move by Beijing.
The tariff pause allows for strategic negotiations, which is good news, but the most critical factor for the global economy remains in escalation mode – this trade war is really only about the US versus China. Will Xi reverse course in attempt to de-escalate? Moreover, markets may be overlooking the fact that a 10% tariff on everything isn’t nothing, and the reality is more uncertainty, and a lack of clarity, for the next three months.
FX markets remain on edge. Safe havens have been sold heavily on the pause news, while those EM and commodity-linked currencies in the firing line of a global trade war have come back strongly. Overnight volatility in the major currencies remains elevated despite tariff reprieve as traders turn focus to today’s release of US inflation data.
Bond sell-off went too far
George Vessey – Lead FX & Macro Strategist
A mass departure from longer-dated US Treasuries drove yields sharply higher, triggering the most significant selloff in these so-called safe assets since 2020. Rising borrowing costs were delivering yet another blow to the global economy, already strained by President Trump’s aggressive tariff policies.
Interest rate differentials – the gap between two countries’ interest rates – act like magnets for investors’ money and play a key role in shaping exchange rates. We’re now observing a shift in dynamics though. The reversal in the usual relationship between US Treasury yields and the dollar suggests that markets are now demanding higher risk premiums on traditionally safe US assets.
This shift likely stems from concerns about stagflation, reputational damage and missteps in policymaking. Other factors include hedge fund deleveraging, speculation of foreign investors offloading US bonds, and a shift toward cash-like shorter-term securities as risk assets falter.
Higher yields, impacting everything from mortgages to loan rates, are undermining a key objective of Trump’s economic policy – lowering borrowing costs to benefit consumers, as highlighted by Treasury Secretary Scott Bessent.
The bottom line – investors were gripped by concerns that something may break in the financial plumbing as volatility and stress build across markets. It seems the bond sell-off went to far and forced Trump to surrender.
Pound recovers with equities, but bonds pose a problem
George Vessey – Lead FX & Macro Strategist
Stress in the bond markets has been evident in the UK too. Yields are rising as worryingly as they are doing in the US and this poses a headache for the UK government’s finances, which is already challenged by tight public finances and a weakening growth outlook. The Bank of England (BoE) has stated the global risk environment has deteriorated, and uncertainty has intensified. The pound has had a torrid week against most peers, especially the yen and swissy, down 2% and 3% respectively before the tariff delay was announced.
What’s interesting is the divergence in yields across the curve. Long-dated yields are rising amid renewed inflation fears driven by escalating US-China trade tensions. For example, the UK’s 30-year gilt yield, rose to its highest level since 1998. In contrast, fears of an economic slowdown has left the 2-year yield relatively unchanged as investors ramp up bets on BoE rate cuts. Markets now price in 93bps of easing this year, including growing expectations of a 50bp cut in May. Meanwhile, if the BoE determines the gilt market is becoming dysfunctional, it may be forced to pause its bond selling programme.
What about the pound? The relief rally in global equity markets, and prospect for stabilization in the UK bond market, is fuel for a recovery in the UKcurrency. GBP/USD is back above $1.28 as risk appetite returns, but the big talking point is GBP/EUR which had suffered its biggest 5-day drop since 2020 and was trading near 1-year lows as traders flocked to the high-liquid appeal of the euro. The pair sharply went into reverse though and now today trading back above €1.17 following Trump’s capitulation to market forces.
More broadly, sterling is becoming increasingly sensitive to market risk. No longer is it being dubbed a tariff safe haven. It continues to fluctuate against most of its peers in line with broader market sentiment and due to the fact the UK will not come away unharmed by a global trade war and economic slowdown.
The direct effect of tariffs looks relatively small because Trump’s regime did not include services exports, which make up the majority of the UK’s nearly £900bn of annual exports. However, lower global demand will hit the already feeble UK economy, which has barely grown over the past six months.
*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 best as global markets surge
Global markets roared higher in a historic move overnight after US President Donald Trump announced a 90-day pause in the implementation of the most severe tariffs on the majority of trading partners. However, President Trump raised tariffs on China to 125%.
The benchmark S&P 500 jumped a massive 9.5%. This was the index’s eighth-best percentage performance in history and the best outside of the Great Depression and Global Financial Crisis eras.
In FX markets, the Australian dollar led the charge higher, with an incredible 3.2% gain, moving the market back towards key resistance at 0.6185.
The NZD/USD also gained strongly, up 2.0%, with this market near resistance at 0.5680.
The moves in Asia were more muted with the USD/JPY up 0.9% after the decision.
The USD/SGD fell 0.9% while the USD/CNH turned sharply, down 1.1%, as the market quickly fell from the all-time highs seen on Wednesday morning.
Asia positioning as US exceptionalism declines
Will the US economy’s recent outperformance fade in the face of tariffs and trade uncertainty? Here are some possible ramifications for Asia markets as the “US exceptionalism” narrative fades.
China, ASEAN, and India have the least connected stock markets with the US, while Korea, Taiwan, and Japan have the most correlation.
It’s not surprising that MSCI China has outperformed year-to-date despite being at the centre of the tariff storm since China authorities’ choice to deleverage the economy a few years ago has delinked Chinese stocks from the US-led global asset cycle.
The attention yesterday was on China’s offshore RMB as the CNH fell to its lowest level since 2010, but the Chinese currency later recovered.
The next key support for USD buyers lies with 50-day EMA 7.2816 for USD/CNH.
FX remains key on tariff talks says Japan’s Kato
According to Bloomberg, Japan’s Finance Minister Katsunobu Kato said in parliament that currency may come up in trade negotiations with the US.
According to Kato, tariffs that are based on “brinkmanship” have the potential to depress Japan’s economy.
USD/JPY rebounded from six-month lows at 144.00 – this level now becomes support. Next key resistance levels are 50-day EMA 149.91 and 200-day 151.17.
Aussie, kiwi surge overnight
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.
With the geopolitical landscape becoming increasingly volatile, cross-border payments and compliance teams must stay alert to evolving sanctions regimes and international enforcement measures. The recent issuance of National Security Presidential Memorandum NSPM-2 by U.S. President Donald Trump marks a renewed phase of strategic pressure on Iran. This directive, along with a wave of sanctions from OFAC, the EU, and the UK targeting Iran, Russia, and other global actors, signals heightened complexity and risk for businesses engaged in international transactions.
From expanded oil-related sanctions to new compliance tools, we explore recent sanctions announcements and their potential impact on businesses engaged in global commerce.
U.S. intensifies pressure on Iran with new national security directive
On February 4, 2025, President Donald Trump issued National Security Presidential Memorandum NSPM-2, directing a comprehensive strategy to exert maximum pressure on Iran. This directive aims to prevent Iran from acquiring nuclear weapons and intercontinental ballistic missiles, while neutralizing its terrorist networks, and countering its aggressive missile development and regional destabilization efforts. The memorandum instructs the Secretary of the Treasury to enforce stringent economic sanctions, targeting individuals and entities violating existing Iran-related sanctions. Additionally, the Secretary of State is tasked with modifying or rescinding sanctions waivers and leading diplomatic initiatives to isolate Iran internationally. The Attorney General is directed to pursue legal actions against Iran-sponsored networks and operatives within the United States.
OFAC takes aim at oil network generating funds for Iran
Following the NSP memo, The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned an international network facilitating the shipment of millions of barrels of Iranian crude oil, valued at hundreds of millions of dollars to China. This network operated on behalf of Iran’s Armed Forces General Staff (AFGS) and its front company, Sepehr Energy Jahan Nama Pars. The sanctions target entities and individuals across multiple jurisdictions, including China, India, and the United Arab Emirates, along with several vessels. Iran reportedly uses revenue from these oil sales to fund regional activities and support terrorist groups such as Hamas, the Houthis, and Hizballah. OFAC’s action aims to disrupt these financial channels and curb Iran’s destabilizing activities.
New File Finder tool on OFAC website simplifies sanctions search
OFAC has unveiled a new File Finder tool designed to make sanctions compliance more efficient by allowing users to search and explore the agency’s entire library of content quickly and easily. Users can filter results by document title, type, and contents, giving businesses faster access to critical regulatory materials. Searchable content includes general licenses, executive orders, federal register notices, legal guidance, and sanctions advisories, among others.
For businesses that operate across borders or handle cross-border payments, this tool is a valuable resource, empowering legal and compliance teams to quickly locate the latest updates, assess potential exposure, and make informed decisions with confidence.
EU implements 16th sanctions package against Russia amid ongoing war in Ukraine
Marking three years since Russia’s full-scale invasion of Ukraine, the European Union introduced its 16th package of sanctions aimed at debilitating Russia’s capacity to continue its aggression. This comprehensive set of measures targets critical sectors of the Russian economy, including a ban on imports of Russian aluminum, restrictions on approximately 70 vessels associated with circumventing oil and gas transport limitations, and sanctions against 13 Russian banks and three financial institutions.
Additionally, the EU imposed trade bans on specific chemicals and suspended broadcasting licenses for eight Russian media outlets. The package also includes further restrictive measures on Belarus mirroring the trade-related sanctions agreed against the Russian Federation, as well as other measures such as restrictions concerning the sale or provision of services and software, deposits and crypto-asset wallets, and transports. These actions underscore the EU’s unwavering commitment to supporting Ukraine’s sovereignty and applying sustained pressure on the Kremlin to cease its unlawful military operations.
This latest package increases compliance complexity and heightens operational risk for international businesses engaged in cross-border payments, particularly in sectors exposed to Russian supply chains or financial systems.
UK announces sweeping sanctions on Russia
Also marking the third anniversary of Russia’s invasion of Ukraine, the UK announced its largest sanctions package since 2022. The move targets over 100 individuals and entities fueling Russia’s war efforts, with a focus on disrupting military supply chains and cutting off revenue streams. Sanctions extend beyond Russia’s borders to firms in China, India, Turkey, and Central Asia supplying dual-use goods and electronics.
The UK also sanctioned North Korean defence officials for deploying forces to aid Russia, and 13 Russian entities involved in technology smuggling. For the first time, new powers were used to target foreign financial institutions, including Kyrgyzstan’s Keremet Bank. The action underscores the UK’s commitment to economic pressure as a tool to weaken Russia’s military capabilities and push toward peace. Businesses involved in cross-border payments should remain alert to evolving sanctions and compliance risks in this shifting geopolitical landscape.
EU eases sanctions on Syria to support economic recovery and humanitarian trade
The European Union (EU) has suspended several restrictive measures against Syria to support its political transition and economic recovery. The Council’s decision lifts sanctions in the energy (oil, gas, electricity) and transport sectors and removes five entities, including the Industrial Bank and Syrian Arab Airlines, from the EU’s asset freeze list. Additionally, certain banking restrictions have been eased to facilitate financial transactions related to these sectors and humanitarian efforts. The EU has also indefinitely extended the existing humanitarian exemption and introduced an exemption for personal use exports of luxury goods to Syria.
While these measures aim to foster engagement with Syria’s populace and businesses, the EU maintains sanctions related to the former Al-Assad regime, chemical weapons, and illicit drug trade, as well as restrictions on arms trade and dual-use goods.
Stay on top of evolving sanctions announcements
When it comes to economic sanctions, businesses engaged in cross-border payments must prioritize vigilance, agility, and informed compliance. From renewed U.S. pressure on Iran to sweeping EU and UK sanctions on Russia, and selective easing in Syria, the geopolitical landscape is in flux. With enforcement extending across borders and sectors, the cost of non-compliance is rising, and the need for clarity has never been greater. Talk Convera today about how we can support your compliance journey in an increasingly regulated world.
Want more insights on the topics shaping the future of cross-border payments? Tune in to Converge, with new episodes every Wednesday.
