Category Currency

Written by the Market Insights Team

Stag creeps, flation leaps

Kevin Ford – FX & Macro Strategist

Signs of weakness in US economic data have weighed on the dollar, fueling concerns about the rising possibility of a downturn in the second half of the year. Yesterday’s reports point to a slowing economic landscape, with markets increasingly anticipating softer data in the coming months. On one hand, ADP private sector hiring in May came in at just 37K its lowest level since March 2023, signaling weaker job growth momentum.

Meanwhile, the ISM services PMI slipped to 49.9, falling short of the expected 52, with new orders plunging to 46.4 from 52.3 the previous month. This sharp decline is fueling concerns about the broader economic trajectory and the potential for a turning point. The downturn was primarily driven by weaker business activity and new orders, both reaching their lowest levels since the COVID-19 lockdowns in 2020. On the cost front, inflationary pressures intensified as the prices paid index climbed to 68.7, reaching levels last seen during the final stretch of the post-pandemic supply chain disruptions.

Concerns over economic growth are rippling through US Treasuries. With fiscal fears easing for now, the 10-year Treasury yield has dipped below 4.4%, while the 30-year yield has fallen under 5%. As markets ignore US policy noise and the VIX drops below its 10-year average of 18.5, the US dollar is adjusting to softer growth expectations, reflecting lower pricing.

On the tariff front, at a press briefing this week, White House spokesperson Karoline Leavitt said US Trade Representative Jamieson Greer sent a letter to all trade partners as a friendly reminder of the upcoming deadline. Yes, we’re almost one month away from the 90-day tariff truce after reciprocal tariffs were announced.  She noted that Greer, along with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, are actively discussing tariffs with key Washington allies. Although the US Court of International Trade initially blocked the tariffs last week, an Appeals Court overturned the decision, keeping them in place and offering the US administration some relief.

All eyes on the NFP tomorrow. Markets expect the US created 126K jobs during May and the unemployment rate to stay at 4.2%. Softer than expected should be dollar negative and might send the DXY Index to test its 2025 low at 97.9.

Euro attempts to hold above $1.14

Antonio Ruggiero – FX & Macro Strategist

The weaker US data batch of late has helped the euro push into $1.14 territory, holding firm above its 21-day moving average. The rebound was hardly surprising, but markets still place greater weight on the stronger-than-expected NFP data later in the week, which poses a downside risk to EUR/USD.

Beyond softer US data, an undercurrent of bearish sentiment continues to drag on the euro, as lingering US trade negotiations with China and the EU prevent the currency from making a decisive break above $1.14. Every US dollar rebound further weakens investor confidence that the euro could emerge as the world’s new reserve currency, a theory that had been gaining traction in recent months.

Nonetheless, uncertainty remains high, with tensions escalating as key deadlines approach. EU officials fear Trump holds outsized “leverage”, arguably his second-favorite word, trailing only behind ‘tariffs’, given the simultaneous crises of trade negotiations and the war in Ukraine. In just 11 days, Trump will square off with European leaders at the G7 summit in Canada, an event expected to provide clarity—or at least hope—on both the geopolitical and trade fronts. Meanwhile, EU leaders are set to meet in Brussels in less than three weeks to negotiate a trade deal with Trump and avert the looming 50% tariffs, with preliminary discussions already underway in Paris this week.

Despite these tensions, EUR/USD overnight volatility remained subdued, especially compared to the eve of previous European Central Bank (ECB) meetings. Aligning with the broad consensus that tariffs will weigh on EU economic activity, the ECB is almost certain to cut its deposit rate to 2.00% today, with markets pricing 99.7% of a cut today. Adding to the case for a cut, Tuesday’s soft Eurozone inflation prints saw the headline figure break below the 2% target to 1.92%, while core inflation—which strips out volatile food and energy prices—fell from 2.7% to 2.3%, reinforcing concerns about economic momentum.

Let’s go oilers!

Kevin Ford – FX & Macro Strategist

“Let’s go, Oilers!” That might have been the only unexpected comment from Bank of Canada Governor Tiff Macklem’s latest press conference. Beyond the hockey enthusiasm, uncertainty remains the theme, just as it was in the April meeting. The big question: when will the BoC provide clearer guidance on monetary policy moving forward?

At this point, a rate cut in July is a coin toss. Macklem pointed out that they’ll be watching two upcoming inflation reports closely before the July meeting. Meanwhile, the Governing Council noted that while disinflationary forces are showing up on the goods side, rising costs are likely keeping inflation elevated, pushing core inflation measures higher than the BoC had expected, and wanted. With a stronger-than-expected Q1 GDP print, the bank opted to hold steady, anticipating slower growth in Q2.

One standout difference between the Federal Reserve and the BoC during 2025 is how Canada’s central bank is actively engaging with businesses to get a fuller picture of the economy beyond just hard data. Companies have built up inventories, paused capital expenditures, and struggled to secure new suppliers, facing rising prices. However, after 7 consecutive cuts and now two pauses from the BoC, the current posture from both central banks stays the same; let’s wait and see.

Also worth noting as of yesterday, the increase in steel and aluminum tariffs from 25% to 50% is now in effect, adding another layer of complexity to Canada’s economic outlook.

Still, market sentiment remains upbeat. The Canadian stock market reached an all-time high earlier this week, the 10-year government bond yield has fallen nearly 18 basis points since May, and the CAD hit a 2025 low yesterday at 1.3653. Short-term movements continue to be driven by dollar weakness, as volatility eases and markets momentarily tune out tariff concerns while awaiting tomorrow’s job data.

UK data resilience driving GBP/USD strength

George Vessey – Lead FX & Macro Strategist

Recent UK data has consistently exceeded expectations this year, pushing Citi’s UK economic surprise index to a one-year high. This has helped GBP/USD climb over 8% year-to-date as the pair closely tracks the UK-US economic surprise differential. The six-month correlation coefficient between the two is nearing its highest level in a decade and is more a reflection of strong UK data as opposed to weak US data.

The de-dollarization narrative amidst waning US economic exceptionalism, a ballooning debt pile and erratic US policy is an obvious weight on the dollar, but this strong correlation also suggests GBP/USD could remain supported if UK data continues to surpass forecasts even amid shifting US conditions. However, any deterioration in UK fundamentals, or a sharp rebound in US data, could temper upside potential for the pound, with $1.36 proving to be a key hurdle to overcome.

In terms of UK data though, the final PMI figures for May have been released this week and the composite figure was revised higher than the preliminary to 50.3 in May, up from April’s 48.5, signalling a return to slight growth despite the reading being its second lowest since October 2023. The increase was driven by stronger services output, offsetting deeper contractions in manufacturing.

The services PMI edged up to 50.9, reflecting a fragile recovery as US tariff concerns receded. However, demand remains weak, with new orders declining for the fourth time in five months. Employment has fallen for eight months, though the latest drop was the mildest since late 2024. Price pressures persist, but business confidence rebounded, supported by investment plans and improving economic prospects.

Yields drop, dollar soft, Kiwi, Aussie and Loonie gain

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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

Stag creeps, flation leaps

Kevin Ford – FX & Macro Strategist

Signs of weakness in US economic data have weighed on the dollar, fueling concerns about the rising possibility of a downturn in the second half of the year. Yesterday’s reports point to a slowing economic landscape, with markets increasingly anticipating softer data in the coming months. On one hand, ADP private sector hiring in May came in at just 37K its lowest level since March 2023, signaling weaker job growth momentum.

Meanwhile, the ISM services PMI slipped to 49.9, falling short of the expected 52, with new orders plunging to 46.4 from 52.3 the previous month. This sharp decline is fueling concerns about the broader economic trajectory and the potential for a turning point. The downturn was primarily driven by weaker business activity and new orders, both reaching their lowest levels since the COVID-19 lockdowns in 2020. On the cost front, inflationary pressures intensified as the prices paid index climbed to 68.7, reaching levels last seen during the final stretch of the post-pandemic supply chain disruptions.

Concerns over economic growth are rippling through US Treasuries. With fiscal fears easing for now, the 10-year Treasury yield has dipped below 4.4%, while the 30-year yield has fallen under 5%. As markets ignore US policy noise and the VIX drops below its 10-year average of 18.5, the US dollar is adjusting to softer growth expectations, reflecting lower pricing.

On the tariff front, at a press briefing this week, White House spokesperson Karoline Leavitt said US Trade Representative Jamieson Greer sent a letter to all trade partners as a friendly reminder of the upcoming deadline. Yes, we’re almost one month away from the 90-day tariff truce after reciprocal tariffs were announced.  She noted that Greer, along with Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick, are actively discussing tariffs with key Washington allies. Although the US Court of International Trade initially blocked the tariffs last week, an Appeals Court overturned the decision, keeping them in place and offering the US administration some relief.

All eyes on the NFP tomorrow. Markets expect the US created 126K jobs during May and the unemployment rate to stay at 4.2%. Softer than expected should be dollar negative and might send the DXY Index to test its 2025 low at 97.9.

Euro attempts to hold above $1.14

Antonio Ruggiero – FX & Macro Strategist

The weaker US data batch of late has helped the euro push into $1.14 territory, holding firm above its 21-day moving average. The rebound was hardly surprising, but markets still place greater weight on the stronger-than-expected NFP data later in the week, which poses a downside risk to EUR/USD.

Beyond softer US data, an undercurrent of bearish sentiment continues to drag on the euro, as lingering US trade negotiations with China and the EU prevent the currency from making a decisive break above $1.14. Every US dollar rebound further weakens investor confidence that the euro could emerge as the world’s new reserve currency, a theory that had been gaining traction in recent months.

Nonetheless, uncertainty remains high, with tensions escalating as key deadlines approach. EU officials fear Trump holds outsized “leverage”, arguably his second-favorite word, trailing only behind ‘tariffs’, given the simultaneous crises of trade negotiations and the war in Ukraine. In just 11 days, Trump will square off with European leaders at the G7 summit in Canada, an event expected to provide clarity—or at least hope—on both the geopolitical and trade fronts. Meanwhile, EU leaders are set to meet in Brussels in less than three weeks to negotiate a trade deal with Trump and avert the looming 50% tariffs, with preliminary discussions already underway in Paris this week.

Despite these tensions, EUR/USD overnight volatility remained subdued, especially compared to the eve of previous European Central Bank (ECB) meetings. Aligning with the broad consensus that tariffs will weigh on EU economic activity, the ECB is almost certain to cut its deposit rate to 2.00% today, with markets pricing 99.7% of a cut today. Adding to the case for a cut, Tuesday’s soft Eurozone inflation prints saw the headline figure break below the 2% target to 1.92%, while core inflation—which strips out volatile food and energy prices—fell from 2.7% to 2.3%, reinforcing concerns about economic momentum.

UK data resilience driving GBP/USD strength

George Vessey – Lead FX & Macro Strategist

Recent UK data has consistently exceeded expectations this year, pushing Citi’s UK economic surprise index to a one-year high. This has helped GBP/USD climb over 8% year-to-date as the pair closely tracks the UK-US economic surprise differential. The six-month correlation coefficient between the two is nearing its highest level in a decade and is more a reflection of strong UK data as opposed to weak US data.

The de-dollarization narrative amidst waning US economic exceptionalism, a ballooning debt pile and erratic US policy is an obvious weight on the dollar, but this strong correlation also suggests GBP/USD could remain supported if UK data continues to surpass forecasts even amid shifting US conditions. However, any deterioration in UK fundamentals, or a sharp rebound in US data, could temper upside potential for the pound, with $1.36 proving to be a key hurdle to overcome.

In terms of UK data though, the final PMI figures for May have been released this week and the composite figure was revised higher than the preliminary to 50.3 in May, up from April’s 48.5, signalling a return to slight growth despite the reading being its second lowest since October 2023. The increase was driven by stronger services output, offsetting deeper contractions in manufacturing.

The services PMI edged up to 50.9, reflecting a fragile recovery as US tariff concerns receded. However, demand remains weak, with new orders declining for the fourth time in five months. Employment has fallen for eight months, though the latest drop was the mildest since late 2024. Price pressures persist, but business confidence rebounded, supported by investment plans and improving economic prospects.

Pound still outperforming dollar

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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.

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

Dollar weaker on weak economic data

Dollar index fell 0.4% to 98.79 as markets digested weak US economic data, particularly ADP employment and ISM Services.

The DXY Index tested 98.67 after the Trump/Putin phone call headlines but recovered to close at 98.79.

In Europe, dip-buying interest in EUR/USD is expected around Thursday’s ECB decision, with regional geopolitical risks seen as potential headwinds.

Risk-sensitive currencies like AUD and NZD outperformed.

Asian currencies showed mixed performance, with CNH tracking broader dollar moves.

SGD gains 0.27% while CNH was up 0.28% overnight.

Contractionary US ISM Services, USD weaker

The US ISM services index dropped from 51.6 in April to 49.9 in May, below the 52-point consensus.

The details don’t seem promising.

The number of new orders dropped from 52.3% to 46.4, the lowest since December 2022.

The one bright spot is that employment increased from 49 to 50.7.  

In Asia, USD/SGD is 0.5% away from September 2024 low of 1.2789.

From technical lens, USD/SGD remains under pressure, with the next key resistance levels of 21-day EMA of 1.2928 and 50-day EMA of 1.3051 remain in sight.

Aussie lower after GDP, but remains in the range

The Australian dollar was initially lower on Wednesday after a disappointing March-quarter GDP reading.

Annualised economic growth to 31 March for Australia was reported at 0.2% for the quarter (below the 0.4% forecast) and 1.3% for the year (below the 1.5% consensus forecast).

The AUD/USD later rallied helped by the weaker US dollar.

For now, the AUD/USD remains in the clearly defined trading range, with USD buyers targeting a move back to 0.6500 while USD sellers will look the lower end of the range at 0.6400.  

With no major AUD data out over the next 48 hours, the main driver of this market will be Friday night’s US non-farm payrolls report.

Antipodeans gain on dollar weakness

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 2 – 6 June

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

BoC to hold

Kevin Ford – FX & Macro Strategist

Why won’t the Bank of Canada (BoC) cut rates today? Ironically, policymakers likely recognize that a rate cut is imminent, yet lingering concerns about inflation rebounding will keep the Bank of Canada on hold, for now.

Despite weak domestic data, particularly business and consumer surveys and employment figures, the BoC is holding off on rate cuts. Stubborn core inflation and a stronger-than-expected Q1 2025 GDP have left Governor Tiff Macklem in a difficult position, limiting the central bank’s flexibility. Adding to the uncertainty, U.S. tariffs remain a key risk, with the BoC acknowledging the challenge of fully assessing their impact. However, the bank notes they are already exerting pressure on the Canadian economy. As a result, the odds of a June rate cut have plunged from 58% in May to just 25% ahead of the meeting.

The focus today will be on the Bank of Canada’s policy announcement and press conference, with investors eager to hear from Governor Tiff Macklem for signals that the BoC may be nearing the end of its easing cycle. Meanwhile, with the Canadian dollar showing less sensitivity to the U.S. dollar compared to other G10 currencies, market watchers are laser-focused on tomorrow’s domestic monetary policy decision.

Dollar’s modest rebound before crucial data

George Vessey – Lead FX & Macro Strategist

The US dollar staged a modest rebound on Tuesday as investors processed a mixed set of US economic data, offering fresh insights into the Federal Reserve’s (Fed) rate path. While the rebound lifted the dollar off its 6-week low, lingering growth concerns and uncertainty over trade negotiations continued to limit further upside as President Trump doubles steel and aluminium tariffs from 25% to 50%.

On the labour front, JOLTs job openings unexpectedly rose to 7.39 million in April, above estimates and March’s revised 7.2 million, reinforcing labour market resilience. However, factory orders fell sharply by 3.7%, signalling manufacturing weakness and raising questions about broader economic momentum. Today, the ADP employment report and ISM services PMI will be crucial  ahead of Friday’s non-farm payrolls report, all of which will help determine the Fed’s policy outlook and dollar’s direction.

Short-term dollar drivers remain tied to evolving Fed policy expectations, with officials signalling a preference for holding rates steady despite mounting pressure for cuts. Escalating trade tensions further complicate the outlook, with the OECD lowering its US growth forecast to 1.6% in 2025 and 1.5% in 2026, citing global uncertainty.

Beyond short-term fluctuations, a bigger concern for long-term dollar positioning is the growing unease around de-dollarization. Trump’s proposed “revenge tax”—Section 899 of his bill—introduces yet another disincentive for foreign investors, further eroding confidence in Treasury bonds and US assets.

Already, erratic trade policies and the nation’s deteriorating fiscal accounts have put pressure on dollar-denominated holdings, prompting global institutions to reassess exposure. If foreign investors perceive heightened risks, capital flow dynamics may shift further away from the dollar, reinforcing the long-term challenges facing the currency.

Eurozone inflation below target ahead of ECB meeting

George Vessey – Lead FX & Macro Strategist

The euro faced selling pressure on Tuesday, weighed down by softer-than-expected inflation data and stronger US economic releases, reinforcing short-term headwinds for the currency. A downgraded global growth outlook from the OECD and heightened political uncertainty in the Netherlands added to investor caution. Trade policy concerns also remained in focus, with the US pushing for final offers in negotiations by Wednesday, just days after renewed tariff threats.

Ahead of the European Central bank’s (ECB) meeting this Thursday we had some interesting inflation data out of Europe supporting the case for interest rates to be lowered further. Services inflation fell to 3.2% from 4%. A sharp decline in core inflation to 2.3% and headline inflation to 1.9% in May all signal that price pressures may undershoot the ECB’s target, cementing the view that the deposit rate will be cut by 25bps to 2% on Thursday. This was one factor weighing the euro but one that could be short-lived. Trade-related uncertainties have so far had a muted impact on Eurozone growth, with global commodity price declines and euro strength against the dollar helping to cushion inflationary pressures. As price concerns ease, the ECB’s focus is shifting toward economic growth, reinforcing a supportive backdrop for the euro in the medium term.

Moreover, if we do see more of a pick-up in FX volatility, the euro is expected to benefit, as it has over the past few months, as an attractive alternative to the dollar. In the very short term, holding above $1.1285 will be key if we want to see a retest of the $1.16 handle this summer. But traders are looking beyond short-term noise and positioning for long-term euro gains as the skew trades in favour of the euro across tenors, with $1.20 a potential target by year-end.

Sheinbaum to fight remittances bill

Kevin Ford – FX & Macro Strategist

Remittances sent to Mexico fell by 12% in April compared to the same month a year earlier, marking the steepest annual decline in over a decade. This drop reflects mounting challenges in the U.S. labor market, where job losses and economic uncertainty have reduced the ability of immigrants to send money back home. Additionally, growing fears of deportation among immigrant communities have likely contributed to the downturn in transfers.

Given that remittances accounted for approximately 3.5% of Mexico’s GDP in 2024, this sharp decline could have significant economic consequences. These financial inflows have long been a vital driver of domestic consumption and economic growth, particularly in households reliant on funds from relatives abroad.

Adding to the uncertainty, U.S. lawmakers are weighing a 5% levy on remittances sent by non-citizens, a proposal that Mexico’s government has strongly opposed, labeling it as double taxation. Mexican President Claudia Sheinbaum has emphasized that all Mexicans living in the U.S. pay taxes, regardless of their legal status. She also pointed out that some states already tax remittances, calling the proposal unjust and discriminatory.

The evolving U.S. labor market conditions and shifting immigration policies may further disrupt the flow of remittances to Mexico in the months ahead, creating additional economic pressures.

On trade-related matters, Mexico’s Minister of the Economy Marcelo Ebrard announced that the official negotiations for the early review of the USMCA will begin in late September, rather than the beginning of June, as previously expected. Ebrard clarified that the evaluation phase had already begun months ago, during which his negotiating team, alongside Mexican business leaders, has been meeting weekly with their U.S. counterparts. Both teams are conducting a deep assessment of what has worked and what needs to be changed since the USMCA was implemented, paving the way for formal negotiations.

US Dollar sustains modest rebound

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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’s modest rebound before crucial data

George Vessey – Lead FX & Macro Strategist

The US dollar staged a modest rebound on Tuesday as investors processed a mixed set of US economic data, offering fresh insights into the Federal Reserve’s (Fed) rate path. While the rebound lifted the dollar off its 6-week low, lingering growth concerns and uncertainty over trade negotiations continued to limit further upside as President Trump doubles steel and aluminium tariffs from 25% to 50%.

On the labour front, JOLTs job openings unexpectedly rose to 7.39 million in April, above estimates and March’s revised 7.2 million, reinforcing labour market resilience. However, factory orders fell sharply by 3.7%, signalling manufacturing weakness and raising questions about broader economic momentum. Today, the ADP employment report and ISM services PMI will be crucial  ahead of Friday’s non-farm payrolls report, all of which will help determine the Fed’s policy outlook and dollar’s direction.

Short-term dollar drivers remain tied to evolving Fed policy expectations, with officials signalling a preference for holding rates steady despite mounting pressure for cuts. Escalating trade tensions further complicate the outlook, with the OECD lowering its US growth forecast to 1.6% in 2025 and 1.5% in 2026, citing global uncertainty.

Beyond short-term fluctuations, a bigger concern for long-term dollar positioning is the growing unease around de-dollarization. Trump’s proposed “revenge tax”—Section 899 of his bill—introduces yet another disincentive for foreign investors, further eroding confidence in Treasury bonds and US assets.

Already, erratic trade policies and the nation’s deteriorating fiscal accounts have put pressure on dollar-denominated holdings, prompting global institutions to reassess exposure. If foreign investors perceive heightened risks, capital flow dynamics may shift further away from the dollar, reinforcing the long-term challenges facing the currency.

Eurozone inflation below target ahead of ECB meeting

George Vessey – Lead FX & Macro Strategist

The euro faced selling pressure on Tuesday, weighed down by softer-than-expected inflation data and stronger US economic releases, reinforcing short-term headwinds for the currency. A downgraded global growth outlook from the OECD and heightened political uncertainty in the Netherlands added to investor caution. Trade policy concerns also remained in focus, with the US pushing for final offers in negotiations by Wednesday, just days after renewed tariff threats.

Ahead of the European Central bank’s (ECB) meeting this Thursday we had some interesting inflation data out of Europe supporting the case for interest rates to be lowered further. Services inflation fell to 3.2% from 4%. A sharp decline in core inflation to 2.3% and headline inflation to 1.9% in May all signal that price pressures may undershoot the ECB’s target, cementing the view that the deposit rate will be cut by 25bps to 2% on Thursday. This was one factor weighing the euro but one that could be short-lived. Trade-related uncertainties have so far had a muted impact on Eurozone growth, with global commodity price declines and euro strength against the dollar helping to cushion inflationary pressures. As price concerns ease, the ECB’s focus is shifting toward economic growth, reinforcing a supportive backdrop for the euro in the medium term.

Moreover, if we do see more of a pick-up in FX volatility, the euro is expected to benefit, as it has over the past few months, as an attractive alternative to the dollar. In the very short term, holding above $1.1285 will be key if we want to see a retest of the $1.16 handle this summer. But traders are looking beyond short-term noise and positioning for long-term euro gains as the skew trades in favour of the euro across tenors, with $1.20 a potential target by year-end.

Pound slumps as dovish signals dominate

Antonio Ruggiero – FX & Macro Strategist

The pound tumbled against major pairs yesterday, wiping out early-week gains. Even against the dollar—recently the weakest link among majors—sterling struggled, with GBP/USD briefly dipping below the $1.34 handle before rebounding.

With little new on the trade front—a factor that has recently weighed on the dollar, strong U.S. jobs data and an equity rally fueled dollar demand, helping it outperform sterling.

The pound’s decline was further driven by dovish signals from the Bank of England, as Governor Andrew Bailey, Deputy Governor Sarah Breeden, and rate-setters Catherine Mann and Swati Dhingra addressed the Treasury Committee in Parliament. Their remarks reinforced expectations that the path for rate cuts remains downward but increasingly uncertain, largely due to global market volatility—particularly stemming from U.S. trade policies. As a result, markets now price in a 62% probability of a second rate cut by year-end.

Adding to the bearish pound sentiment, Mann’s earlier comments on quantitative tightening resurfaced. She warned that ongoing bond sales could stunt economic growth by keeping long-dated yields elevated, creating a policy tension between rate cuts and balance sheet reduction. Markets took the messaging as unmistakably dovish—yields dropped, and the pound followed suit.

Despite the dip, the pound’s performance remains resilient in the bigger picture. A strong domestic backdrop, combined with ongoing uncertainty in the US, should continue to support sterling, with GBP/USD still up over 1.5% year-to-date. Overall, sentiment toward the currency remains firmly bullish.

Pound pulls back across the board

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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.

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

USD rebounds from three-year lows

The greenback climbed from key support at the three-year lows after a better-than-expected result from the US labour market boosted sentiment.

The job openings and labour turnover series (JOLTS) saw an increase in job openings from 7.20m in March to 7.39m in April.

The result continues to show that while some US data is weakening, employment data has remained resilient – this is key ahead of Friday’s US jobs report.

The Aussie and kiwi both reversed from recent highs.

The AUD/USD fell 0.5% while NZD/USD lost 0.6%. The USD/SGD gained 0.4%.

Aussie lower as RBA minutes shows 50bps cut considered

The Reserve Bank of Australia’s May meeting minutes, released yesterday, revealed the board’s preference for a cautious 25 basis point rate cut over a larger 50bps cut.

Despite domestic conditions supporting cuts, policymakers remained concerned about inflation not sustainably reaching targets and persistent labor market tightness.

They noted no clear evidence of global trade risks significantly impacting the economy.

The RBA emphasized its commitment to measured, predictable policy while maintaining readiness to act if downside economic risks materialize.

The AUD/USD is currently near the top its six-month trading range.

Chinese yuan higher despite weaker data

China’s Caixin Manufacturing PMI dropped to 48.3 in May, significantly below expectations of 50.7 and April’s 50.4 reading, marking the lowest level since September 2022.

This contraction occurred despite recent US-China diplomatic progress in Geneva. The private sector survey contrasted with official data showing slight improvement to 49.5, though still contractionary.

Both supply and demand weakened substantially, with Caixin noting that unfavorable economic development factors remain widespread across China’s manufacturing sector.

The 21-day EMA of 7.2111 acts as key resistance level for USD/CNH to break next, followed by 50-day EMA of 7.2365.

Greenback higher, but CNY bucks trend

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 19 – 24 May

All times AEST

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

USD rebounds from three-year lows

The greenback climbed from key support at the three-year lows after a better-than-expected result from the US labour market boosted sentiment.

The job openings and labour turnover series (JOLTS) saw an increase in job openings from 7.20m in March to 7.39m in April.

The result continues to show that while some US data is weakening, employment data has remained resilient – this is key ahead of Friday’s US jobs report.

The Aussie and kiwi both reversed from recent highs.

The AUD/USD fell 0.5% while NZD/USD lost 0.6%. The USD/SGD gained 0.4%.

Aussie lower as RBA minutes shows 50bps cut considered

The Reserve Bank of Australia’s May meeting minutes, released yesterday, revealed the board’s preference for a cautious 25 basis point rate cut over a larger 50bps cut.

Despite domestic conditions supporting cuts, policymakers remained concerned about inflation not sustainably reaching targets and persistent labor market tightness.

They noted no clear evidence of global trade risks significantly impacting the economy.

The RBA emphasized its commitment to measured, predictable policy while maintaining readiness to act if downside economic risks materialize.

The AUD/USD is currently near the top its six-month trading range.

Chinese yuan higher despite weaker data

China’s Caixin Manufacturing PMI dropped to 48.3 in May, significantly below expectations of 50.7 and April’s 50.4 reading, marking the lowest level since September 2022.

This contraction occurred despite recent US-China diplomatic progress in Geneva. The private sector survey contrasted with official data showing slight improvement to 49.5, though still contractionary.

Both supply and demand weakened substantially, with Caixin noting that unfavorable economic development factors remain widespread across China’s manufacturing sector.

The 21-day EMA of 7.2111 acts as key resistance level for USD/CNH to break next, followed by 50-day EMA of 7.2365.

Greenback higher, but CNY bucks trend

Table: seven-day rolling currency trends and trading ranges  

Key global risk events

Calendar: 19 – 24 May

All times AEST

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

Key shifts in the dollar’s path

Kevin Ford – FX & Macro Strategist

Where’s the US dollar headed next? To put it simply, for decades, its movement has largely hinged on two forces, global growth cycles and Federal Reserve (Fed) tightening. Before the financial crisis, strong global expansion fueled risk-taking, drawing capital away from the U.S. The BRICS era amplified this trend as investors sought international assets. Meanwhile, Fed rate hikes have consistently shaped dollar dynamics. But today, shifting portfolio flows and unexpected asset allocation patterns suggest it’s time to rethink this traditional framework.

Lately, worries about US asset safety, especially long-term bonds, have gained traction. Over the past decade or so, the “U.S. exceptionalism” era saw heavy global investment in American equities, fixed income, and ETFs. Now, international players are pulling back. While this isn’t a full retreat from the dollar, it hints at a strategic shift in portfolio management as exposure to US assets is intentionally trimmed, a cautious recalibration by major institutions.

Several forces are reshaping investor sentiment. Tariffs have unsettled confidence, while speculation swirls about China offloading treasuries. In reality, China has simply reduced its purchases over the years, diversifying its holdings. The bigger moves, however, are coming from traditional allies, Canada and Europe, whose treasury investments eclipse China’s. Their retreat from US assets isn’t abrupt but rather a measured shift driven by multiple factors, including hedging strategies. This transition isn’t easily seen in the data, as institutional investors are hedging US exposure rather than dumping portfolios outright. Instead of bulk selling, they sell USD forward while buying CAD or EUR forward. Then, they gradually fine-tune their positions to trim underlying dollar-denominated asset exposure. Is this trend coming to an end? Tough to say, but the relentless slide in the US dollar over the past four months largely traces back to heavy futures market selling by key US trading partners. Their positioning suggests a deeper recalibration rather than just short-term fluctuations, hinting at broader shifts in global portfolio strategies.

What could influence the dollar’s trajectory in the coming weeks?

• Section 899 tax provision. Investor focus is locked on the House tax bill, which appears to raise rates on US assets linked to nations imposing ‘unfair foreign taxes.’ This could translate into higher withholding taxes on US-sourced interest, dividends, and FDAP income, potentially climbing to 20%, adding another layer of pressure to the already bearish sentiment surrounding the dollar.
• The evolving fiscal backdrop remains a key factor, amplifying doubts about the dollar’s stability. While historically stimulus efforts fueled risk asset rallies and supported the USD, sentiment is shifting. Investors are growing increasingly wary of persistent deficits, which now inject an added dose of unpredictability into market dynamics.
• Front-loading effect. Recent import payments have fueled capital outflows, straining the U.S. current account and weighing on the dollar. This intensified selling pressure has contributed to its recent weakness. However, as payment cycles normalize, this trend is expected to reverse in Q2, potentially easing downward pressure on the currency.

Euro bulls charge amid U.S. woes

Antonio Ruggiero – FX & Macro Strategist

With renewed trade tensions weighing on U.S. sentiment, the euro surged to its highest level since late April, when EUR/USD briefly broke above $1.15. Yesterday, the pair reached an intraday high of $1.1450, driven by disappointing U.S. PMI data—where the manufacturing index contracted further, slipping from 48.7 to 48.5 in May.

The resurgence in bullish momentum saw hedge funds reinstating aggressive bets on euro strength, reversing last week’s trimming of topside bullish bets as optimism had faded. However, on a one-month horizon, sentiment remains subdued, with today’s risk reversal levels still below the one-month average. Trump’s latest tariff threat—doubling levies on steel and aluminum to 50%—has drawn swift criticism from the European Commission, which warned that it undermines efforts to resolve the dispute. With a July 9 deadline looming, the EU has signaled it is prepared to retaliate if an agreement is not reached.

EU trade chief Maros Sefcovic will meet U.S. Trade Representative Jamieson Greer in Paris on Wednesday, while a separate Commission delegation heads to Washington for continued discussions.

Looking ahead, market participants are closely watching JOLTS data tomorrow and Friday’s NFP release, as these could further reinforce the string of weak U.S. economic prints from the past week. Given that U.S. news flow remains the key driver of euro strength, EUR/USD could end the week above $1.14, as bearish euro-specific drivers—such as the ECB rate cut and soft Eurozone CPI—appear to be largely priced in.

Banxico remains dovish

Kevin Ford – FX & Macro Strategist

Banco de México (Banxico) last week released the minutes of its May 15 monetary policy meeting, where the board unanimously decided to cut the reference rate by 50 basis points for the third consecutive time, bringing it to 8.50%. The board’s stance remains dovish, anticipating that economic slack will ease inflationary pressures.

The minutes reinforce signals that further cuts could follow despite rising inflation, with policymakers citing expectations of weaker economic growth. The board’s forward guidance suggests continued monetary policy adjustments at a similar pace. Officials appear confident that disinflation will resume amid slowing economic activity, while Q2 growth is expected to soften as temporary Q1 drivers fade.

Reflecting Mexico’s broader economic challenges, its manufacturing PMI painted a similarly bleak picture yesterday. The index edged up from 44.8 in April to 46.7 in May, according to S&P Global, but remained in contraction for the 11th consecutive month.

Manufacturers continued to struggle with pressure on both supply and demand, with new orders declining for the 11th straight month, partly due to U.S. tariffs. Export activity saw its sharpest drop since early 2021, while purchasing slowed at the fastest rate since late 2020, underscoring lingering concerns over weak demand.

Eying fresh 2025 highs

George Vessey – Lead FX & Macro Strategist

Sterling’s price action at the start of the week has been reminiscent of April in that it is being driven mostly by external pressures and FX flows and hence EUR/USD’s surge higher has dragged GBP/EUR towards €1.18 but pushed GBP/USD back above $1.35. The dollar continues to struggle when trade tensions escalate, and early signs point to renewed pressure as geopolitical uncertainties resurface at the start of the week.

The pound has logged four consecutive monthly gains against the dollar, fueling prospects for further upside – especially if investors persist in scaling back dollar exposure amid US policy uncertainty. A move toward $1.40 in the second half of this year remains on the radar, provided macroeconomic conditions align favorably. Key drivers will likely include shifts in rate expectations, geopolitical developments, and broader risk sentiment.

On Monday, UK manufacturing PMI for May was revised up to 46.4 from an initial estimate of 45.1, slightly improving on April’s 45.4 reading. Despite this adjustment, however, the sector continued to struggle with challenging operating conditions. Weak global demand, volatile trading environments, and rising costs weighed on production, new orders, export business, and employment. Final services and composite PMI numbers are due tomorrow.

In terms of positioning – CFTC data indicate hedge funds remain long on the pound, edging closer to year-to-date highs. Meanwhile, real-money investors, though still net short, have eased their bearish stance to the most balanced level since November. Overall, there appears to be room for building pound long positions, with no signs of immediate exit pressure across the board.

US Dollar DXY hovers around 99

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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.

Key shifts in the dollar’s path

Kevin Ford – FX & Macro Strategist

Where’s the US dollar headed next? To put it simply, for decades, its movement has largely hinged on two forces, global growth cycles and Federal Reserve (Fed) tightening. Before the financial crisis, strong global expansion fueled risk-taking, drawing capital away from the U.S. The BRICS era amplified this trend as investors sought international assets. Meanwhile, Fed rate hikes have consistently shaped dollar dynamics. But today, shifting portfolio flows and unexpected asset allocation patterns suggest it’s time to rethink this traditional framework.

Lately, worries about US asset safety, especially long-term bonds, have gained traction. Over the past decade or so, the “U.S. exceptionalism” era saw heavy global investment in American equities, fixed income, and ETFs. Now, international players are pulling back. While this isn’t a full retreat from the dollar, it hints at a strategic shift in portfolio management as exposure to US assets is intentionally trimmed, a cautious recalibration by major institutions.

Several forces are reshaping investor sentiment. Tariffs have unsettled confidence, while speculation swirls about China offloading treasuries. In reality, China has simply reduced its purchases over the years, diversifying its holdings. The bigger moves, however, are coming from traditional allies, Canada and Europe, whose treasury investments eclipse China’s. Their retreat from US assets isn’t abrupt but rather a measured shift driven by multiple factors, including hedging strategies. This transition isn’t easily seen in the data, as institutional investors are hedging US exposure rather than dumping portfolios outright. Instead of bulk selling, they sell USD forward while buying CAD or EUR forward. Then, they gradually fine-tune their positions to trim underlying dollar-denominated asset exposure. Is this trend coming to an end? Tough to say, but the relentless slide in the US dollar over the past four months largely traces back to heavy futures market selling by key US trading partners. Their positioning suggests a deeper recalibration rather than just short-term fluctuations, hinting at broader shifts in global portfolio strategies.

What could influence the dollar’s trajectory in the coming weeks?

• Section 899 tax provision. Investor focus is locked on the House tax bill, which appears to raise rates on US assets linked to nations imposing ‘unfair foreign taxes.’ This could translate into higher withholding taxes on US-sourced interest, dividends, and FDAP income, potentially climbing to 20%, adding another layer of pressure to the already bearish sentiment surrounding the dollar.
• The evolving fiscal backdrop remains a key factor, amplifying doubts about the dollar’s stability. While historically stimulus efforts fueled risk asset rallies and supported the USD, sentiment is shifting. Investors are growing increasingly wary of persistent deficits, which now inject an added dose of unpredictability into market dynamics.
• Front-loading effect. Recent import payments have fueled capital outflows, straining the U.S. current account and weighing on the dollar. This intensified selling pressure has contributed to its recent weakness. However, as payment cycles normalize, this trend is expected to reverse in Q2, potentially easing downward pressure on the currency.

Euro bulls charge amid U.S. woes

Antonio Ruggiero – FX & Macro Strategist

With renewed trade tensions weighing on U.S. sentiment, the euro surged to its highest level since late April, when EUR/USD briefly broke above $1.15. Yesterday, the pair reached an intraday high of $1.1450, driven by disappointing U.S. PMI data—where the manufacturing index contracted further, slipping from 48.7 to 48.5 in May.

The resurgence in bullish momentum saw hedge funds reinstating aggressive bets on euro strength, reversing last week’s trimming of topside bullish bets as optimism had faded. However, on a one-month horizon, sentiment remains subdued, with today’s risk reversal levels still below the one-month average. Trump’s latest tariff threat—doubling levies on steel and aluminum to 50%—has drawn swift criticism from the European Commission, which warned that it undermines efforts to resolve the dispute. With a July 9 deadline looming, the EU has signaled it is prepared to retaliate if an agreement is not reached.

EU trade chief Maros Sefcovic will meet U.S. Trade Representative Jamieson Greer in Paris on Wednesday, while a separate Commission delegation heads to Washington for continued discussions.

Looking ahead, market participants are closely watching JOLTS data tomorrow and Friday’s NFP release, as these could further reinforce the string of weak U.S. economic prints from the past week. Given that U.S. news flow remains the key driver of euro strength, EUR/USD could end the week above $1.14, as bearish euro-specific drivers—such as the ECB rate cut and soft Eurozone CPI—appear to be largely priced in.

Eying fresh 2025 highs

George Vessey – Lead FX & Macro Strategist

Sterling’s price action at the start of the week has been reminiscent of April in that it is being driven mostly by external pressures and FX flows and hence EUR/USD’s surge higher has dragged GBP/EUR towards €1.18 but pushed GBP/USD back above $1.35. The dollar continues to struggle when trade tensions escalate, and early signs point to renewed pressure as geopolitical uncertainties resurface at the start of the week.

The pound has logged four consecutive monthly gains against the dollar, fueling prospects for further upside – especially if investors persist in scaling back dollar exposure amid US policy uncertainty. A move toward $1.40 in the second half of this year remains on the radar, provided macroeconomic conditions align favorably. Key drivers will likely include shifts in rate expectations, geopolitical developments, and broader risk sentiment.

On Monday, UK manufacturing PMI for May was revised up to 46.4 from an initial estimate of 45.1, slightly improving on April’s 45.4 reading. Despite this adjustment, however, the sector continued to struggle with challenging operating conditions. Weak global demand, volatile trading environments, and rising costs weighed on production, new orders, export business, and employment. Final services and composite PMI numbers are due tomorrow.

In terms of positioning – CFTC data indicate hedge funds remain long on the pound, edging closer to year-to-date highs. Meanwhile, real-money investors, though still net short, have eased their bearish stance to the most balanced level since November. Overall, there appears to be room for building pound long positions, with no signs of immediate exit pressure across the board.

Euro in the top 10% of recent range with pound

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: June 2-6

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.

Convera is thrilled to release part two of The Payments Pulse, a multipart report analyzing the changing state of international trade and commerce. Building on the market insights examined in The Payments Pulse part one, we now turn our attention to the unfolding emergence of three payments innovations promising to increase liquidity, certainty, and inclusion around the world.

As real-time payments (RTP) expand across borders, businesses engaged in international trade stand to benefit from instant global payments. Meanwhile, the recent boom in stablecoin usage suggests this fiat-pegged cryptocurrency could be on the path for mainstream adoption. And lastly, we rethink corporate treasury management through the lens of decentralized finance. In a rapidly evolving financial ecosystem, understanding these innovations could help your business increase transaction speed and payment delivery, reduce processing costs, and tap into new financial efficiencies.

Download Part 2 of the Payments Pulse now

The expansion of real-time payment systems across borders

Every business wants faster payments, especially when it comes to cross-border transactions that have traditionally been slow and costly. RTPs have the potential to accelerate doing business across borders, with global volumes projected to surge 161% to reach $58 trillion by 2028.

Almost 80 countries have already adopted an RTP network for their domestic payments, providing consumers and businesses alike with 24/7 instant payments, even on weekends. The next wave of innovation lies in the integration of domestic payment rails across borders, delivering instantaneous money movement around the world.

While regulatory and technical harmonization remains a challenge, ongoing infrastructure development and evolving frameworks suggest that real-time cross border capabilities will continue to gain momentum throughout the decade.

The European Central Bank (ECB) is making significant strides, having expanded the Eurozone’s TARGET Instant Payment Settlement (TIPS) service to include the Norwegian krone in April 2025, adding to the currently supported euro, Swedish krona, and Danish krone. North America is making international headway, with Payments Canada announcing that half the technical build is now complete for its much-delayed Real-Time Rail (RTR) system into the U.S. In the Asia Pacific region, Australia and Hong Kong have demonstrated advanced platforms for processing RTPs, while additional progress is sweeping Africa and the Middle East, bringing unprecedented access and financial inclusion to underserved markets.

Multinational collaborations are also fueling the growth of cross-border RTP networks, with the Bank for International Settlements (BIS) Innovation Hub’s Project Nexus aiming to standardize cross-border transactions by connecting domestic real-time payments systems across different countries. As these systems integrate and interoperable standards are rolled out, cross-border transactions are poised to become more seamless.

Real-time payments, real-time benefits

RTP networks offer substantial advantages to businesses, especially small and medium enterprises (SMEs). The speed of transactions helps optimize cash flow, reduce working capital and enhance liquidity. Other benefits of real-time payments include greater transparency, reduced costs and stronger supplier relationships through timely transactions. Additionally, RTP networks have the potential to enable businesses to scale globally by facilitating instant transactions with partners worldwide.

“Real-time cross border payments are no longer a future ambition; they’re a present-day game-changer,” says Dharmesh Syal, Convera’s Chief Technology Officer. “The expansion of real-time payment networks is pushing businesses toward new ways of operating, reshaping financial ecosystems and opening new doors for financial inclusion on a global scale.”

While RTP networks present significant opportunities for financial institutions, they also pose challenges, particularly in upgrading legacy infrastructure and combating fraud. To overcome such obstacles, institutions can partner with third-party providers like Convera to adopt scalable, API-driven payment systems, helping to meet growing customer demands for speed and transparency.

Stablecoins: Digital currencies on the verge of mainstream adoption

As digital currencies continue to reshape the global financial landscape, stablecoins growing into a transformative force, particularly in cross border payments.

What are stablecoins?  They’re a form of cryptocurrency designed to maintain a steady value by being pegged to a fiat currency, such as the US dollar, or a commodity like gold. This stability, combined with the speed and transparency of blockchain technology, makes stablecoins a strong contender for mainstream adoption in business transactions.

“With institutions like the Bank of America weighing in on the conversation, it seems like stablecoins are on a precipice,” says Scott Johnson, Vice President of Technical Program Management at Convera. “Ultimately, their mainstream adoption will hinge on a regulatory environment flexible enough to support innovation while reassuring both businesses and consumers that stablecoins are safe and trustworthy.”

For global businesses, stablecoins offer substantial advantages over traditional cross border payment systems. Traditional banking systems can take days to process cross-border transactions, while stablecoins leverage the blockchain to settle almost instantly, offering enhanced cash flow and reduced counterparty risk. Additionally, transaction costs can be significantly lower — some estimates suggest savings of up to 80% compared to traditional methods that often involve multiple intermediaries and hefty fees.

Stablecoins also offer increased accessibility for markets with limited banking infrastructure, helping businesses in underserved regions engage in international trade more easily. By providing an alternative to traditional banking systems, stablecoins are helping drive financial inclusion on a global scale.

The road ahead for stablecoins

While stablecoins present significant opportunities, they also pose challenges for financial institutions. Traditional banks face hurdles adapting to the round-the-clock nature of blockchain transactions, and concerns about regulatory uncertainty persist.

As the regulatory landscape matures and more financial institutions integrate stablecoins into their infrastructure, this stabilized cryptocurrency is poised to move from niche buzzword to mainstream financial tool. With the potential to transform the global payments system, stablecoins are quickly becoming a key player in the future of digital finance.

Blockchain: Rethinking corporate treasury management through decentralized finance

As blockchain technology continues to evolve, its potential to revolutionize corporate treasury management is becoming increasingly evident. No longer just a buzzword in fintech circles, blockchain is being recognized for its capacity to streamline cash flow management, reduce operational costs and improve risk mitigation strategies, particularly with cross border payments.

Treasurers have long juggled multiple currencies, competing payment systems and varying regulatory environments, all while managing liquidity, forecasting cash flow, and minimizing risks. Factors like inflation, exchange rate fluctuations and geopolitical instability further complicate cash management, creating the need for real-time insights. Cross border payments, in particular, suffer from a lack of speed and transparency, leading to inefficiencies and risks. These challenges have made treasury functions one of the most operationally intensive aspects of financial management.

Blockchain technology offers a promising solution to these persistent challenges, as a secure and transparent online ledger that records transactions across a distributed network of computers. The Blockchain provides three key advantages:

• Decentralization: Removing intermediaries
• Immutability: Protecting against fraud
• Transparency: Increasing trust by providing an open, verifiable record that ensures compliance

For treasury functions, one key benefit of blockchain stands out — it enables near-instant cross-border settlements. This capability allows treasurers to manage liquidity more precisely, ensuring that operational costs are reduced, while funds are available when and where they’re needed.

Another crucial benefit of blockchain is its potential for “atomic settlement.” This means that transactions can settle simultaneously for all parties involved, reducing the risk of settlement failure and counterparty risks, a significant concern in treasury operations.

Smart contracts and tokenization

A particularly exciting aspect of blockchain for treasury management is the use of smart contracts that automatically execute and enforce agreements based on predefined rules. For treasurers, this means transactions, such as supplier payments, can be automatically triggered when conditions are met, reducing the need for manual intervention, lowering operational costs and ensuring more efficient liquidity management.

Tokenization, or the creation of digital representations of physical assets on the blockchain, is another area where blockchain is transforming treasury functions. By turning assets like currency, real estate or stocks into tokens, businesses can engage in real-time transactions that were once a significant challenge.  

The future of blockchain in treasury management looks bright. As regulatory clarity improves and organizations overcome technical barriers uptake is expected to increase driving efficiency and profitability in cross-border payments.

Convera: Your partner for the future of cross border payments

The global payments ecosystem is experiencing a major shift with businesses, institutions and consumers demanding faster, more cost-efficient, and transparent transactions. As organizations adjust to new requirements, Convera is here to facilitate global growth.

• Access a global network: Our vast network of banking partners and local payment capabilities in over 200 countries and territories enables businesses to reach more customers and suppliers efficiently and cost-effectively. 
• Process fast, transparent payments: ISO 20022 compatibility for seamless payment processing helps your business grow internationally with efficiency and control. 
• Mitigate currency risk: Our currency risk management experts help businesses develop tailored strategies to manage FX volatility, forecast with confidence, and stay on top of cash flow.  
• Streamline compliance: A robust compliance framework that helps you stay ahead of shifting U.S trade policies, sanctions, and fast-changing financial regulations. 
• Less costs, more efficiencies: A robust infrastructure developed in collaboration with the world’s largest businesses, banks and fintechs helps automate manual processes and lower transaction costs. 
• Simplify adoption and integration: Our cloud and API-based platform ensures seamless integration with tech stacks, for easy incorporation of global payments into your operations and product offerings. 

Download part 2 of The Payments Pulse now and stay tuned for the final installment coming in September.

Want more insights into 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.