Currency Archives - Page 9 of 27

May 14, 2025 By PARKERYL Currency

US dollar loses steam after inflation undershoot – United States

Written by the Market Insights Team

Inflation softens with no tariff bite yet

George Vessey – Lead FX & Macro Strategist

The US dollar index hovered around 100.9 on Wednesday, after falling nearly 1% in the previous session, whilst US stocks have wiped out their losses so far this year, following Tuesday’s lower than expected US inflation figures.

April’s US consumer prices index rose just 0.2% m/m, undershooting expectations and bringing headline inflation down to 2.3% y/y, its lowest since February 2021. Core inflation remains at 2.8% y/y, and supercore came in at the lowest in about four years. Overall price pressures appear to be easing with little urgency so far by companies to pass along the cost of higher tariffs to consumers.

With the US inflation basket dominated by services, the impact of tariffs on goods, just 19.4% of the index, may stay limited for now, especially amid waning price pressures in housing and services. The NFIB small business survey reinforced this, showing a decline in firms raising prices, adding to the case for softer inflation trends. Although it may still be premature to see the impact from tariffs, it opens the door for earlier-than-expected cuts from the Fed.

The US dollar’s reversal from its 50-week moving average resistance level suggest the currency’s rebound is losing steam. But the rise in US yields suggests investors are looking past short-term inflation relief, awaiting more clarity on tariff pass-through effects in upcoming May and June data. The Fed’s wait-and-see approach has somewhat supported the dollar via the yield channel, but if core data weaken, relative yield support could shift, triggering further dollar downside risks.

Looking ahead, investors are focused on upcoming retail sales and producer inflation data later this week for further signals on the health of the US economy.

Euro rebounds as sentiment brightens

George Vessey – Lead FX & Macro Strategist

The euro is holding firm just below the $1.12 handle, rebounding from Monday’s 1.5% drop as investors assessed stronger-than-expected German economic sentiment and a surprise dip in US inflation.

Germany’s ZEW Economic Sentiment Index surged to 25.2 in May, from -14 the previous month and far exceeding forecasts of 11.3, signalling growing optimism around economic stability, government formation, and trade progress. In May, almost 30% of surveyed analysts expected an improvement in economic activity amid some progress in tariff disputes and stabilizing inflation. The European Union remains in discussions with the Trump administration to negotiate a resolution on tariffs, yet it has prepared counter-levies on €95 billion worth of US exports should talks fail.

EUR/USD found support at its 50-day moving average, with its 14-day relative strength index hovering around neutral levels near 50, suggesting waning downside momentum. Strengthening expectations for European economic growth and contained inflation risks may encourage international capital flows into European equities, particularly as US positioning remains light.

This backdrop presents a tactical opportunity for a shift toward European assets, increasing the likelihood of relative outperformance in European markets, should growth surprise to the upside. Such trends could continue to support euro demand over the long term as sentiment improves.

Pound holds onto 6% gains versus dollar this year

George Vessey – Lead FX & Macro Strategist

The British pound recovered from Monday’s sharp decline, bouncing from below $1.32 to above $1.33 after softer-than-expected US CPI dented dollar demand. GBP/USD is now attempting to reclaim its 21-day moving average, reinforcing prospects for a continued uptrend from January’s $1.21 low. One key catalyst to help drive the pair expand on its more than 6% gains year-to-date would be an extended batch of US economic data misses.

Meanwhile, GBP/EUR gained further traction, briefly changing hand with the €1.19 handle amidst fading market volatility and improved global risk appetite helping the risk-sensitive pound more than the euro. If risk appetite remains elevated, the pound’s high-beta status could fuel an extension above €1.19, but several key moving averages need to be hurdled, such as the 200-day at €1.1925, to strengthen our conviction of a move back towards €1.20.

While UK economic growth remains fragile, recession risks are easing, and the Bank of England has kept a cautious but measured stance, avoiding an aggressive dovish shift. If FX markets refocus on yields, the sterling-euro yield differential remains a bullish factor, supporting the pound’s relative strength. Equally, tariff management advantages, validated by last week’s US-UK trade deal, should continue to bolster GBP sentiment as well.

Chart of GBPUSD vs UK-US data surprise spread

Stocks extend rebound to 4.5% in a week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 12-16

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.

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May 14, 2025 By PARKERYL Currency

Aussie back near highs as US inflation cools – United States

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

Aussie jumps after US inflation falls

The Australian dollar was one of the best performers overnight with the AUD/USD up 1.6% after a lower-than-expected inflation number caused the US dollar to fall.

The rebound saw the AUD/USD less than 1.0% away from five-month highs.

US annual headline inflation fell from 2.4% in March to 2.3% in April while the core reading was steady at 2.8%.

The NZD/USD also gained strongly with NZD/USD up 1.6%.

Chinese yuan stronger as trade tensions cool

In other market, the cooling from trade tensions was the key driver after the US reduced import duties to 30%, which includes 20% fentanyl duties and 10% universal duties.

Other universal tariffs have not changed, such as the 25% on steel and aluminum and the 25% on automobiles and car components.

To facilitate more discussions, 24% reciprocal tariffs will be halted for 90 days.

The weighted average duty on all imports is reduced from 24% to 15%, while the weighted average tariff on imports from China is reduced from 100% to 35%.

Conversely, China suspends a further 24% of reciprocal duties for 90 days and reduces them to 10% on US imports.

China, meanwhile, stated that it will take the required actions to halt or revoke non-tariff countermeasures against the United States.

The USD/CNH is now more than 3% away from this year’s peak of 7.4290.

The USD/CNH has fallen back to six-month lows, but with the pair still in a long-term uptrend, the path of least resistance is higher in the medium term.

Fed Gooslbee still worried about stagflation

Ahead of last night’s inflation reading, Chicago Federal Reserve President Goolsbee told The New York Times that he believes the tariffs will continue to cause stagflation and that the deal’s short-term character may harm the economy.

Goolsbee continues to believe that the Fed should wait and watch.

Looking at APAC FX, the USD/SGD has edged back up as we’ve been highlighting the potential strength earlier.

The next key resistance levels for the pair is 21-day EMA of 1.3077 and 50-day EMA of 1.3199 next.

USD lower after CPI

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 12 – 17 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.

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May 13, 2025 By PARKERYL Currency

Solid risk-on session on trade truce – United States

Written by the Market Insights Team

Tariff reset rally

Kevin Ford – FX & Macro Strategist

Just a few months ago, a 30% tariff rate on China would have seemed extreme. Now, those levels are fueling one of the biggest equity market rallies in recent history, with the S&P posting its strongest 22-day surge since 2020. Before COVID, a rally of this magnitude had only occurred during the global financial crisis and the dot-com bubble. Sentiment has shifted, and investors are responding with renewed optimism as the US and China roll back tariffs. The US dollar is also making a comeback, up almost 4% from its 2-year low printed last month.

The US-China tariff deal includes a 115%-point reduction in tariffs, lowering US tariffs on Chinese imports from 145% to 30% and Chinese tariffs on US imports from 125% to 10%. China will suspend or remove non-tariff countermeasures imposed since April 2, 2025, such as export restrictions on critical minerals, though the agreement does not explicitly mention rare earth elements or sanctions on US defense and tech companies. Meanwhile, the US will maintain all pre-April 2 tariffs, including those related to intellectual property, steel, aluminum, and fentanyl trade. The de minimis exemption, which allowed duty-free entry for small parcels, remains terminated, meaning low-value packages under $800 from China and Hong Kong will still face tariffs. Additionally, Chinese electric vehicles, steel, and aluminum remain subject to existing tariffs, along with certain pre-April 2 non-tariff measures, though blacklisting US companies was not explicitly confirmed in the final agreement. While this deal marks a major step in trade de-escalation, key areas of uncertainty remain, and further negotiations could determine whether these tariff adjustments become permanent.

Over the past month, while the Nasdaq is up 11%, the S&P 8%, the US dollar index remains 6% lower year-to-date. Clearly, markets don’t need the greenback to recover, for now. But for the dollar to rally further, it will require stronger international demand. Confidence remains fragile amid these shifting trade dynamics, contributing to the disconnect in market reactions.

As mentioned last week, the worst appears to be behind us. Trump blinked, and the US administration has stepped back. Could they have set a 10% base tariff from the start instead of the extreme levels seen on Liberation Day to avoid this turbulence? Perhaps. The challenge now is managing the uncertainty of this 90-day window. We’ve already seen aggressive front-running over the past two months, which could distort data further, something the Fed, already cautious, will need to navigate carefully.

Euro down almost 5% from recent peaks

George Vessey – Lead FX & Macro Strategist

The euro continues to extend losses as trade de-escalation fuels a reversal in the “sell America” trade, boosting US equities while oil prices surge. The inverse correlation between the euro and US stocks and crude remains strong, with fading volatility adding to downside pressure on the common currency, which is now almost 5% down from recent peaks.

Crude’s rally of late, driven by signs that the global trade fallout may be less severe than feared, is lifting commodity prices. As a net importer of oil, Europe faces higher energy costs, weighing further on the euro if the rally continues. EUR/USD dropped 1.4% on Monday, marking its biggest daily decline since the post-US election slump, as it battles to hold above the $1.11 handle. A short-term move toward $1.10 is possible, especially if the pair closes below its 50-day moving average at $1.1084. Today’s German ZEW surveys will be closely monitored to assess whether the euro’s slide extends further or stabilizes near current levels.

Market focus may now shift back to yield differentials too. The Fed’s cautious stance favours dollar bulls, contrasting with expectations of more ECB rate cuts ahead, meaning EUR/USD may fall further in line with euro-US yield spreads. That said, US core data remains uncertain and any cyclical softening could trigger fresh dollar depreciation, particularly if Fed rate expectations adjust dovishly.

Loonie weakens on changing mood

Kevin Ford – FX & Macro Strategist

President Trump made it clear that no country would get the same treatment as the UK. This doesn’t bode well for Canada, as broad-based tariffs persist, keeping the outlook for the Canadian economy uncertain and under pressure. What we’re now seeing played out in trade deals, with both the US-UK and US-China agreements, is that baseline tariffs between 10% and 30% are now a mainstay.

USD/CAD extended last week’s rebound, briefly pausing at 1.394 before resuming its climb, driven by renewed trade optimism as the U.S. and China agreed to slash tariffs by 115% for 90 days. Some resistance is expected near 1.401, where the 200-day SMA sits. Meanwhile, widening US-Canada yield spreads and shifting Fed expectations suggest the Canadian dollar will likely stay above 1.39 in the short term. Broader US dollar strength against the Euro, Pound, and Yen should continue to support USD/CAD’s upward momentum in the coming sessions.

Looking ahead, U.S.-Japan trade negotiations remain stuck, as Japan refuses to accept any deal that lacks sector-specific exemptions. In South Korea, the prospect of a trade agreement before the country’s presidential election on June 3 has been completely abandoned. Meanwhile in the Eurozone, officials are assembling a package of retaliatory tariffs targeting $100 billion worth of U.S. industrial goods. So, this may be as good as trade policy gets, at least for now.

Sterling outpaces euro, but dollar dominates

George Vessey – Lead FX & Macro Strategist

The pound suffered its biggest daily decline in a month on Monday as the US dollar came out on top after the positive US-China trade developments. GBP/USD is grappling with the $1.32 handle today, over two cents from its 2025 peak, but still circa 3% above its 5-year average. A drop towards the 50-day moving average at $1.3091 looks feasible in the short term, but FX traders are still optimistic about the pound’s outlook over a longer time horizon.

Meanwhile, the positive GBP/EUR bias gained momentum following the tariff news, with three key drivers supporting further sterling upside. First, while the UK economic outlook isn’t particularly bullish, recession risks are easing, and the BoE remains cautious without ramping up its dovish stance. Second, as FX markets shift focus back to yields, the sterling-euro yield differential remains firmly bullish, reinforcing the currency’s relative strength. Third, the UK’s advantage in tariff management – a core bullish factor identified earlier this year – was validated by last week’s US-UK trade deal, further bolstering sentiment. One missing piece in the GBP/EUR rally has been risk appetite, but with market optimism returning, sterling’s high-beta status could help extend the pair beyond €1.19, should momentum persist.

On the data front, this morning’s UK labour market report revealed the unemployment rate edged higher to 4.5% as expected – its highest level since 2021. Moreover, the number of workers on payrolls dropped 33,000 in the wake of a sharp increase in employment costs announced in the October budget and the clouded global economic outlook. Separate figures showed wage growth slowing — another sign of a cooling labor market. Private-sector wage growth, the gauge most closely watched by the BoE to gauge underlying pay excluding bonuses, slowed to 5.6% from 5.9%. It was lower than the consensus forecast but above the 3% consistent with keeping inflation sustainably at the 2% target, which is why the BoE maintains a cautious approach to policy easing.

Dollar index climbs over 2% in a week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 12-16

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quothave a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

Source link

May 13, 2025 By PARKERYL Currency

De-escalation elation, but will it last? – United States

Written by the Market Insights Team

Tariff reset rally

Kevin Ford – FX & Macro Strategist

Just a few months ago, a 30% tariff rate on China would have seemed extreme. Now, those levels are fueling one of the biggest equity market rallies in recent history, with the S&P posting its strongest 22-day surge since 2020. Before COVID, a rally of this magnitude had only occurred during the global financial crisis and the dot-com bubble. Sentiment has shifted, and investors are responding with renewed optimism as the US and China roll back tariffs. The US dollar is also making a comeback, up almost 4% from its 2-year low printed last month.

The US-China tariff deal includes a 115%-point reduction in tariffs, lowering US tariffs on Chinese imports from 145% to 30% and Chinese tariffs on US imports from 125% to 10%. China will suspend or remove non-tariff countermeasures imposed since April 2, 2025, such as export restrictions on critical minerals, though the agreement does not explicitly mention rare earth elements or sanctions on US defense and tech companies. Meanwhile, the US will maintain all pre-April 2 tariffs, including those related to intellectual property, steel, aluminum, and fentanyl trade. The de minimis exemption, which allowed duty-free entry for small parcels, remains terminated, meaning low-value packages under $800 from China and Hong Kong will still face tariffs. Additionally, Chinese electric vehicles, steel, and aluminum remain subject to existing tariffs, along with certain pre-April 2 non-tariff measures, though blacklisting US companies was not explicitly confirmed in the final agreement. While this deal marks a major step in trade de-escalation, key areas of uncertainty remain, and further negotiations could determine whether these tariff adjustments become permanent.

Over the past month, while the Nasdaq is up 11%, the S&P 8%, the US dollar index remains 6% lower year-to-date. Clearly, markets don’t need the greenback to recover, for now. But for the dollar to rally further, it will require stronger international demand. Confidence remains fragile amid these shifting trade dynamics, contributing to the disconnect in market reactions.

As mentioned last week, the worst appears to be behind us. Trump blinked, and the US administration has stepped back. Could they have set a 10% base tariff from the start instead of the extreme levels seen on Liberation Day to avoid this turbulence? Perhaps. The challenge now is managing the uncertainty of this 90-day window. We’ve already seen aggressive front-running over the past two months, which could distort data further, something the Fed, already cautious, will need to navigate carefully.

Looking ahead, US-Japan trade negotiations remain stuck as Japan refuses to accept any deal that lacks sector-specific exemptions. In South Korea, the prospect of a trade agreement before the country’s presidential election on June 3 has been completely abandoned. Meanwhile in the Eurozone, officials are assembling a package of retaliatory tariffs targeting $100 billion worth of US industrial goods. So, this may be as good as trade policy gets, at least for now.

Euro down almost 5% from recent peaks

George Vessey – Lead FX & Macro Strategist

The euro continues to extend losses as trade de-escalation fuels a reversal in the “sell America” trade, boosting US equities while oil prices surge. The inverse correlation between the euro and US stocks and crude remains strong, with fading volatility adding to downside pressure on the common currency, which is now almost 5% down from recent peaks.

Crude’s rally of late, driven by signs that the global trade fallout may be less severe than feared, is lifting commodity prices. As a net importer of oil, Europe faces higher energy costs, weighing further on the euro if the rally continues. EUR/USD dropped 1.4% on Monday, marking its biggest daily decline since the post-US election slump, as it battles to hold above the $1.11 handle. A short-term move toward $1.10 is possible, especially if the pair closes below its 50-day moving average at $1.1084. Today’s German ZEW surveys will be closely monitored to assess whether the euro’s slide extends further or stabilizes near current levels.

Market focus may now shift back to yield differentials too. The Fed’s cautious stance favours dollar bulls, contrasting with expectations of more ECB rate cuts ahead, meaning EUR/USD may fall further in line with euro-US yield spreads. That said, US core data remains uncertain and any cyclical softening could trigger fresh dollar depreciation, particularly if Fed rate expectations adjust dovishly.

Sterling outpaces euro, but dollar dominates

George Vessey – Lead FX & Macro Strategist

The pound suffered its biggest daily decline in a month on Monday as the US dollar came out on top after the positive US-China trade developments. GBP/USD is grappling with the $1.32 handle today, over two cents from its 2025 peak, but still circa 3% above its 5-year average. A drop towards the 50-day moving average at $1.3091 looks feasible in the short term, but FX traders are still optimistic about the pound’s outlook over a longer time horizon.

Meanwhile, the positive GBP/EUR bias gained momentum following the tariff news, with three key drivers supporting further sterling upside. First, while the UK economic outlook isn’t particularly bullish, recession risks are easing, and the BoE remains cautious without ramping up its dovish stance. Second, as FX markets shift focus back to yields, the sterling-euro yield differential remains firmly bullish, reinforcing the currency’s relative strength. Third, the UK’s advantage in tariff management – a core bullish factor identified earlier this year – was validated by last week’s US-UK trade deal, further bolstering sentiment. One missing piece in the GBP/EUR rally has been risk appetite, but with market optimism returning, sterling’s high-beta status could help extend the pair beyond €1.19, should momentum persist.

On the data front, this morning’s UK labour market report revealed the unemployment rate edged higher to 4.5% as expected – its highest level since 2021. Moreover, the number of workers on payrolls dropped 33,000 in the wake of a sharp increase in employment costs announced in the October budget and the clouded global economic outlook. Separate figures showed wage growth slowing — another sign of a cooling labor market. Private-sector wage growth, the gauge most closely watched by the BoE to gauge underlying pay excluding bonuses, slowed to 5.6% from 5.9%. It was lower than the consensus forecast but above the 3% consistent with keeping inflation sustainably at the 2% target, which is why the BoE maintains a cautious approach to policy easing.

Dollar index climbs over 2% in a week

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 12-16

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.

Source link

May 13, 2025 By PARKERYL Currency

International sanctions: SDN list update and fines for UK law firm – United States

For businesses operating in the global economy, where cross border payments are a crucial part of operations, geopolitical pressures are heightening sanctions and economic trade risks. Sanctions are highly dynamic and often implemented without warning, making it difficult for businesses of all sizes to monitor and address. In fact, PwC’s 2024 Global Economic Crime Survey found that although 44% of executives view sanctions compliance as a priority, only 30% have comprehensive assessments of their programs.

From updates to the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) Specially Designated Nationals (SDN) list, to new restrictions imposed against “teapot” oil refineries, we cover the latest international sanctions alerts your business needs to know.

International cartels added to OFAC’s SDN list as terrorist organizations

OFAC recently issued the International Cartels Designated as Foreign Terrorist Organizations and Specially Designated Global Terrorists alert, raising awareness of the resulting sanctions and criminal liability risks for U.S. and foreign financial institutions, and others with exposure to these cartels. The U.S. Department of State officially designated eight such organizations, and OFAC has updated its Specially Designated Nationals and Blocked Persons (SDN) list accordingly.

As a result, all property and interests in property of these entities within the United States or under the control of U.S. persons are blocked. U.S. persons are generally prohibited from engaging in transactions with these organizations unless authorized. Non-U.S. persons are also prohibited from actions that evade U.S. sanctions or cause U.S. persons to violate them. Violations may lead to civil or criminal penalties, including for providing material support to these designated organizations under 18 U.S.C.

OFAC advises companies and financial institutions, especially those operating in high-risk jurisdictions where these cartels are active, to assess and strengthen their sanctions compliance programs to mitigate exposure. For more information on OFAC-administered sanctions programs and compliance frameworks, visit the OFAC website.

UK law firm fined for breaching Russia sanctions during Moscow office closure

The UK’s Office of Financial Sanctions Implementation (OFSI) has fined Herbert Smith Freehills CIS LLP (HSF Moscow) £465,000 for violating UK sanctions against Russia. The breaches occurred in May 2022, as HSF Moscow was winding down operations following Russia’s invasion of Ukraine. Over seven days, the subsidiary made six payments totalling approximately £3.93 million to sanctioned Russian banks: Alfa-Bank, PJSC Sovcombank, and PJSC Sberbank.

These transactions contravened asset freeze restrictions, making funds directly available to designated entities. OFSI attributed the violations to inadequate due diligence and sanctions screening, exacerbated by the hasty closure of the Moscow office. HSF London, the parent company, voluntarily disclosed the breaches, resulting in a 50% reduction of the penalty. OFSI emphasized that no fault was found with HSF London’s actions.

Economic Secretary to the Treasury Emma Reynolds highlighted the UK’s commitment to enforcing financial sanctions as a means to disrupt Russia’s war efforts and support Ukraine. This case underscores the importance for businesses operating in high-risk environments to maintain robust compliance measures, especially during periods of operational transition.

OFAC sanctions “teapot” oil refinery for facilitating Iranian oil exports

OFAC has imposed sanctions on Shandong Shouguang Luqing Petrochemical Co., Ltd., a Chinese “teapot” refinery, and its CEO, Wang Xueqing, for purchasing and refining hundreds of millions of dollars’ worth of Iranian crude oil. These transactions involved vessels linked to the Iranian Ministry of Defense and Armed Forces Logistics (MODAFL) and the Houthi movement, Ansarallah. The refinery’s activities are seen as a significant economic lifeline for Iran, a state sponsor of terrorism.

Additionally, OFAC sanctioned 19 entities and vessels comprising Iran’s “shadow fleet,” which employs deceptive shipping practices to transport Iranian oil. These includes eight vessels and several companies based in Hong Kong, Panama, Seychelles, and other jurisdictions, all implicated in operating within Iran’s petroleum sector. The sanctions, enacted under Executive Order 13902, block all U.S.-linked assets of the designated parties and prohibit U.S. persons from engaging in transactions with them.

This action represents the fourth round of sanctions targeting Iranian oil sales since the issuance of National Security Presidential Memorandum 2 on February 4, 2025, reinforcing the U.S. commitment to disrupting Iran’s revenue streams that fund terrorism and its nuclear program.

Sanctions: what you don’t know could cost you

In today’s global economy, businesses of all sizes engage in cross-border transactions, whether importing goods, managing global supply chains, or sending payments to international partners. With this opportunity comes a critical layer of risk: economic sanctions. These powerful policy tools are used by governments and international bodies to influence the behavior of foreign actors, ranging from individuals and companies to entire regimes. For internationally active businesses, understanding and complying with sanctions regimes is not optional, it’s essential.

What are international sanctions?

Sanctions are legal restrictions imposed by one country (or group of countries) on another, targeting trade, financial transactions, travel, and more. These measures are typically used to address issues such as terrorism, human rights abuses, nuclear proliferation, or regional instability. Sanctions can be comprehensive, banning almost all trade and financial transactions with a country, or focused on targeting specific individuals, entities, or sectors like defense or energy.

Key authorities issuing sanctions include the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the European Union, the United Nations, and the UK’s Office of Financial Sanctions Implementation (OFSI). Each has its own rules, lists, and enforcement practices, making global compliance a complex undertaking.

Why international sanctions matter to businesses

Sanctions carry significant implications for businesses. A single misstep, such as unknowingly paying a supplier linked to a sanctioned entity can lead to severe penalties, frozen assets, reputational damage, or even criminal liability.

Legal and financial risk: The cost of non-compliance can be high. OFAC, for example, regularly issues multimillion-dollar fines to companies for international sanctions violations, even when those violations are unintentional. In some cases, individuals within the company may be held personally liable.

Reputational damage: Beyond fines, a sanctions breach can tarnish a business’s reputation with investors, partners, and customers. In our digital age where transparency is expected, even being indirectly linked to sanctioned entities can erode trust and lead to long-term brand harm.

Operational disruption: Sanctions can restrict access to global markets, freeze transactions, or require the rapid withdrawal from regions where a company has invested heavily. Changes to sanctions regimes often come with little warning, causing supply chain disruptions, payment delays, and operational challenges

Regulatory scrutiny: businesses dealing with cross border payments are expected to maintain rigorous compliance systems, including Know Your Customer (KYC) protocols, transaction screening, and regular audits. As enforcement tightens globally, businesses that fall short risk heightened scrutiny and costly investigations.

Navigating an evolving landscape

International sanctions are dynamic. They shift with the geopolitical landscape and often evolve rapidly in response to conflicts or political developments. In recent years, we’ve seen sweeping sanctions in response to Russia’s invasion of Ukraine, ongoing restrictions on Iran and North Korea, and growing scrutiny around Chinese technology companies. In 2025, the U.S. government issued a new National Security Presidential Memorandum (NSPM-2), intensifying pressure on Iran and signaling a new phase of enforcement that impacts financial institutions and corporates worldwide.

For businesses operating internationally, staying ahead of these changes is critical to maintaining business operations. Proactively managing sanctions risks gives businesses a competitive edge by helping to protect their reputation, ensuring business continuity, and maintaining trusted relationships across markets. In a world where trust and transparency are more important than ever, sanctions compliance should be embedded in every aspect of cross-border operations—from payment systems and procurement processes to executive decision-making. 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.

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

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May 13, 2025 By PARKERYL Currency

US shares, greenback surge on US-China trade deal – United States

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

Trade deal sparks market euphoria

Global markets surged higher in early European trading on Monday after US Treasury Secretary Scott Bessent announced a de-escalation in trade tensions that saw both the US and China slash tariffs for a 90-day period.

The US agreed to cut tariffs from 145% to 30% while China will reduce their tariffs from 125% to 10% for the next 90 days. US president Donald Trump said the agreement achieved a “total reset” with China.

US stockmarkets led the charge higher with the US’s Dow Jones up 2.8%, the S&P 500 up 3.3% while the Nasdaq jumped and incredible 4.4%.

The greenback gained across Asia with the AUD/USD down 0.6% while the NZD/USD fell 0.9%. The USD/SGD climbed 0.6%.

The Chinese yuan outperformed, however, with the USD/CNH down 0.6%.

US leads gains

The US dollar led the gains in other markets with the stop-gap agreement helping sentiment around US economic growth.

The greenback’s biggest gains were against the safe-haven currencies with the USD/CHF up 1.7% while the USD/JPY jumped 2.1%.

The Swiss franc and Japanese yen were also weaker in APAC with the Swiss franc falling to one-month lows versus the Australian and Singapore dollars while the AUD/JPY and NZD/JPY climbed to at least one-month highs.

The European markets extend a recent reversal with the euro and British pound, previously some of the biggest winners from trade worries, down further overnight. The EUR/USD fell 1.4% with the GBP/USD down just under 1.0%.

The euro and British pound were also weaker across Asia. The AUD/EUR reached the highest level since 3 April.

US CPI in focus

Financial markets will now wonder whether this deal might have any impact on the Federal Reserve ahead of tonight’s US inflation reading.

The Fed has previously said that uncertainty around tariffs means the central bank is uncomfortable cutting rates without further evidence of the potential inflationary impact of trade barriers.

US headline annual inflation for April is forecast to remain at 2.4% while the core number is also forecast to stay steady at 2.8%.

That said, a higher number tonight could add weight to the USD’s current upside momentum. US CPI is due at 10.30pm AEST.

USD surges on trade deal

Table: seven-day rolling currency trends and trading ranges

USD surges on trade deal

Table: seven-day rolling currency trends and trading ranges

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.

Source link

May 12, 2025 By PARKERYL Currency

US Dollar surges on US-China tariff deal – United States

Written by the Market Insights Team

Fundamentals in Canada remain weak

Kevin Ford – FX & Macro Strategist

USD/CAD extended last week’s rebound after briefly pausing at 1.394, fueled by renewed trade optimism as the U.S. and China agreed to slash tariffs by 115% for the next 90 days. The deal lowers U.S. tariffs on Chinese imports to 30% and China’s tariffs on U.S. goods to 10%, helping to stabilize market sentiment as negotiations continue. In addition, some export restrictions have been temporarily lifted, adding to the optimism surrounding trade discussions.

For the USD/CAD some resistance is expected as it approaches the 1.40 level, where the 200-day SMA sits. The US Dollar has gained sharply against Euro and Pound amid broad strength. Equity markets wasted no time reacting to the news. Dow Jones futures jumped 2.1%, S&P 500 futures climbed 2.8%, and Nasdaq-100 futures surged 3.8% early Monday, reflecting renewed investor confidence in easing trade tensions.

On the macro front, last week’s jobs report revealed Canada’s unemployment rate edged up to 6.9% in April, marking its highest level since November. Job growth was minimal, with only 7.4K positions added, and the manufacturing sector took the biggest hit, shedding 31K jobs, the sharpest decline since January 2009, outside of the COVID-19 crisis. This 1.6% drop marks the sector’s first major setback since November 2024, as ongoing uncertainty around U.S. tariffs continues to weigh on business confidence.

Ontario was hit the hardest, losing 33K jobs (-3.9%), with Windsor feeling the most pressure. Given that automotive industries account for 43.1% of the city’s manufacturing employment, the region saw its unemployment rate jump 1.4 percentage points to 10.7%. Meanwhile, wholesale and retail trade also showed signs of weakness, cutting 27K jobs (-0.9%).

Last week’s Bank of Canada financial stability report flagged job losses as a growing risk to the economy, especially with household debt remaining high. A weaker labor market could add financial strain for borrowers, making policymakers more cautious. As a result, the chances of another rate cut at the Bank’s next meeting are looking higher.

Dollar extends gain as busy week beckons

George Vessey – Lead FX & Macro Strategist

The US dollar index is reaching a 4-week highs this morning, extending its 3-week rally as US-China reached a deal. US stock futures are outperforming, leading gains over European and Asian shares, while traditional safe-haven currencies, the yen and Swiss franc, slipped alongside Treasuries, reflecting fading demand for defensive assets. Meanwhile, China-linked currencies surged, with Australian and New Zealand dollars climbing alongside the yuan, while the euro retreated, mirroring shifts in global sentiment.

Although the whole situation remains fluid and uncertainty is still high, much of the fallout from Trump’s “Liberation Day” tariff announcements has been erased as the President softens his protectionist stance, fueling a relief rally and suppressing volatility. However, investors remain cautious, reluctant to make big bets on optimistic rhetoric without concrete steps to reduce levies, particularly between the US and China. While the tone has shifted, uncertainty persists, keeping traders on edge until clear policy moves emerge.

The dollar, which faced selling pressure earlier this year over concerns about trade policy uncertainty, has regained ground as negotiation optimism, solid economic data, and the Fed’s cautious stance on rate cuts underpin demand. As well as keeping a close eye on trade talks, US consumer inflation data on Tuesday, followed by retail sales and producer prices on Thursday, will be under the microscope as investors look for fresh signals on how the trade war has impacted the economy and when the Fed will start cutting rates again.

Euro slides as risk appetite builds

George Vessey – Lead FX & Macro Strategist

The euro continues to face downside pressure, retreating toward a key support region ($1.12) against the US dollar as US equity futures rally. Encouraging signals from US-China trade talks over the weekend have reinforced the pattern of inverse moves between risk assets and the common currency.

Recent market dynamics have positioned the euro as a hedge against US policy uncertainty, benefiting from safe-haven flows when equities decline. However, with sentiment shifting toward optimism and risk appetite strengthening, the euro is likely to remain under pressure. Any further trade progress could accelerate the move, keeping the currency on the defensive.

The Eurozone’s recovery narrative is also being tested. This week’s ZEW survey and GDP data could prove pivotal. Any signs of weakening momentum could further weigh on the euro, particularly if US economic resilience comes back into focus. Investors will watch these releases closely, assessing whether the euro’s recent slide extends further or stabilizes near current levels.

Mexico auto industry on a downward trend

Kevin Ford – FX & Macro Strategist

After a standout 2023, Mexico’s auto industry has been on a downward slide, and the latest U.S. tariffs aren’t doing it any favors. With 70% of Mexico’s automotive production heading to the U.S., any disruption in trade hits hard.

April 2025 was no exception. According to Instituto Nacional de Estadística y Geografía (INEGI), car exports dropped 10.9% year-over-year, reversing the 3.8% uptick seen in March. The tariffs have clearly slowed shipments to the U.S., with some of the biggest names feeling the pressure.

Mazda had the toughest month, with exports plunging 60.9%. Volkswagen also struggled, down 44.4%, while Mercedes-Benz, -43.9%, Stellantis (Chrysler and Fiat), -36.9%, Audi -33.7%, and BMW -32.6% all posted sharp declines. Toyota bucked the trend, jumping 36.4%, while General Motors +8.8%, and Ford +1% also managed to stay in positive territory.

Dollar gains sharply against Euro and Pound amid broad strength

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 12-16

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quothave a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

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May 12, 2025 By PARKERYL Currency

Easing US-China tensions bolster risk appetite – United States

Written by the Market Insights Team

Dollar extends gain as busy week beckons

George Vessey – Lead FX & Macro Strategist

The US dollar index is closing in on 4-week highs this morning, extending its 3-week rally as US-China trade talks over the weekend signalled progress. US stock futures are outperforming, leading gains over European and Asian shares, while traditional safe-haven currencies, the yen and Swiss franc, slipped alongside Treasuries, reflecting fading demand for defensive assets. Meanwhile, China-linked currencies surged, with Australian and New Zealand dollars climbing alongside the yuan, while the euro retreated, mirroring shifts in global sentiment.

The US and China are set to provide further details on the trade deal today following a weekend of marathon negotiations in Geneva, Switzerland. Officials from both sides have already signaled momentum, with Washington emphasizing progress toward a deal and Beijing highlighting mutual agreement to launch a formal economic and trade negotiation process. Although the whole situation remains fluid and uncertainty is still high, much of the fallout from Trump’s “Liberation Day” tariff announcements has been erased as the President softens his protectionist stance, fueling a relief rally and suppressing volatility. However, investors remain cautious, reluctant to make big bets on optimistic rhetoric without concrete steps to reduce levies, particularly between the US and China. While the tone has shifted, uncertainty persists, keeping traders on edge until clear policy moves emerge.

The dollar, which faced selling pressure earlier this year over concerns about trade policy uncertainty, has regained ground as negotiation optimism, solid economic data, and the Fed’s cautious stance on rate cuts underpin demand. As well as keeping a close eye on trade talks, US consumer inflation data on Tuesday, followed by retail sales and producer prices on Thursday, will be under the microscope as investors look for fresh signals on how the trade war has impacted the economy and when the Fed will start cutting rates again.

Euro slides as risk appetite builds

George Vessey – Lead FX & Macro Strategist

The euro continues to face downside pressure, retreating toward a key support region ($1.12) against the US dollar as US equity futures rally. Encouraging signals from US-China trade talks over the weekend have reinforced the pattern of inverse moves between risk assets and the common currency.

Recent market dynamics have positioned the euro as a hedge against US policy uncertainty, benefiting from safe-haven flows when equities decline. However, with sentiment shifting toward optimism and risk appetite strengthening, the euro is likely to remain under pressure. Any further trade progress could accelerate the move, keeping the currency on the defensive.

The Eurozone’s recovery narrative is also being tested. This week’s ZEW survey and GDP data could prove pivotal. Any signs of weakening momentum could further weigh on the euro, particularly if US economic resilience comes back into focus. Investors will watch these releases closely, assessing whether the euro’s recent slide extends further or stabilizes near current levels.

Bullish drivers for pound

George Vessey – Lead FX & Macro Strategist

A fairly hawkish Bank of England (BoE), a UK trade deal with the US and the upcoming Brexit summit all point to potentially further gains for the pound in the short term. But due to dollar resilience of late, GBP/USD continues to struggle to grip onto $1.33. GBP/EUR, on the other hand, is at a more than 1-month high above €1.18, closing the gap on rate differentials.

Last week, the BoE cut interest rates by 25 basis points to 4.25%, with a vote split that saw two policymakers preferred to hold rates at 4.5%, which gave the pound a modest boost. The Monetary Policy Report revealed growth forecasts were lowered beyond this year, flagging weakening labour conditions, whilst inflation projections were revised downward, suggesting a sustained undershoot of the 2% target. Meanwhile, the UK-US trade deal was symbolic, but although it is no game changer for the outlook of the UK economy or for the pound, it has proved supportive for the British currency against safe haven peers bar the dollar. The dollar is proving to be the main beneficiary of easing trade tensions, keeping GBP/USD pinned below $1.33 for now. Looking further out though, traders are still more optimistic on the pound’s outlook versus the dollar – with options traders least bearish GBP over a 12-month time horizon since 2014.

This week, we expect the official UK labour market data to show a further increase in the unemployment rate to 4.5% in March. This would be its highest level since August 2021. Wage growth is expected to moderate, with regular private sector wages slowing by to 5.7%. Moreover, headline GDP growth is projected at 0.6% in Q1, up from 0.1% in Q4. Finally, British negotiators are sitting down for a week of intensive talks with their EU counterparts as they prepare for the looming Brexit summit on May 19.

Safe havens underperform as risk appetite improves

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 12-16

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.

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May 11, 2025 By PARKERYL Currency

Aussie opens higher as US, China report “substantial progress” in talks – United States

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

US-China trade talks report progress

The Australian dollar was higher in early Monday trade with reports of progress in US-China trade talks boosting sentiment.

US and China representatives met over the weekend in Vienna, Switzerland.

While no specific trade outcomes were announced, the two countries agree to a new negotiation forum led by US Treasury Secretary Soctt Bessent and Chinese Vice Premier He Lifeng.

The Aussie and kiwi both gained due to their sensitivity to global trade, but otherwise the US dollar was mostly higher.

On Friday, the AUD/USD has slipped to one-week lows before rebounding later the session.

The NZD/USD fell to three-week lows on Friday before later recovering.

Aussie, kiwi see momentum shift

While the trade news has seen a short-term boost this morning, this week remains make-or-break for the Aussie and kiwi dollars.

After significant rallies – the AUD/USD jumped 10.1% from the early April lows while the NZD/USD is up 9.8% in the same period – both currencies have recently lost momentum.

Most significant, over the last week, both the AUD/USD and NZD/USD both saw shifts in the MACD indicator, a key measure of momentum.

As a result, markets will be closely watching how the pairs trade this week. For the AUD/USD, a break below 0.6340 will be seen a negative sign that could signal further losses.

For NZD/USD, a break below 0.5870 will see the market move into a medium-term downtrend.

US inflation, Australian jobs in focus this week

Looking to the week ahead, key inflation readings across major economies will be closely monitored this week.

In the US, the Consumer Price Index (CPI) for April is due on Tuesday, with the year-on-year rate expected to remain steady at 2.4%, while the month-on-month rate is forecasted to tick up slightly to 0.3% from -0.1%.

Australia’s employment data on Thursday could influence RBA expectations, with consensus forecasting a 25k increase in employment and an unemployment rate holding steady at 4.1%.

In the US, initial jobless claims will be released on Thursday, offering further signals on the state of the labor market.

Additionally, US consumer sentiment will be gauged through the preliminary release of the University of Michigan’s Sentiment Index on Friday, expected to show a slight improvement to 53 from 52.2.

Aussie, kiwi climb on trade news

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 12 – 17 May

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

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May 9, 2025 By PARKERYL Currency

US Dollar bounces on trade optimism – United States

Written by the Market Insights Team

Fed overlooking stagflation fears

Kevin Ford – FX & Macro Strategist

The Federal Reserve (Fed) remains in wait-and-see mode, letting economic conditions play out before making any policy moves. Unlike 2019, when it acted pre-emptively, the Fed claims that there’s no urgency for intervention, and stagflation concerns aren’t front and center, at least not yet. Still, Powell’s worst fears could already be unfolding, with ISM manufacturing price trends potentially informing inflation in the coming weeks, even as front-running distorts short-term data.

Markets are riding a wave of optimism, with US stocks rallying Thursday on hopes of lower tariffs. The White House is framing this as a trade war victory, buoyed by the UK trade deal announcement and upcoming talks with China. The S&P 500 and Nasdaq 100 both gained over 1%, erasing earlier losses and hitting their highest levels since March. However, the baseline 10% tariff remains unchanged, signaling that double-digit tariffs are likely here to stay. The deal grants preferential tariff access for UK-imported vehicles and partial relief for steel and aluminum products. In exchange, the UK opened its market to $5 billion in US exports, primarily in agriculture, chemicals, and machinery. The big question remains, are markets getting ahead of themselves? While sentiment is strong, the true economic impact of tariffs has yet to unfold. Time will tell if this optimism can sustain markets through the summer.

The dollar, which didn’t have the same level of participation in the recent rally, has rebounded this week on trade optimism, climbing past 100 for a second straight session, fueled by hopes that the US-UK trade deal could be the first of several. Yesterday, the greenback gained most against the yen and Canadian dollar but gains against the British pound were limited after the Bank of England (BoE) delivered a widely expected rate cut while striking a surprisingly hawkish tone.

CAD hinges on dollar strength

Kevin Ford – FX & Macro Strategist

After the Fed meeting on Wednesday, the Loonie extended its losses, reinforcing downward pressure. The UK-US trade deal discussions triggered a stronger rebound, pushing the DXY back above the 100 level and sending USD/CAD to 1.393—its highest point of the week. As previously noted, short-term rate differentials between the U.S. and Canada continue to widen, solidifying 1.38 as a key support level. The Loonie may pause around 1.394 before making a potential move toward 1.40 in the coming days. With DXY reclaiming the 100 level and VIX easing, upward momentum now appears more likely.

On the macro side, the Bank of Canada’s annual Financial System Survey offers a snapshot of key financial risks, resilience, and emerging trends, drawing insights from senior risk management experts. This year’s results highlighted concerns over rising household debt and the growing influence of leveraged hedge funds in government-bond auctions, factors that have cooled expectations for an imminent rate cut and reinforced a more cautious stance on monetary policy.

The Canadian bond market didn’t take the news well, with 10-year government bond yields jumping above 3.22%, hitting a two-week high. A mix of domestic and regional pressures continues to push longer-term borrowing costs higher. Meanwhile, the government’s ramped-up bond issuance to finance fiscal initiatives is adding to supply, keeping yields elevated.

UK-US trade deal is symbolic at best

George Vessey – Lead FX & Macro Strategist

It is the first trade deal agreed after President Trump began his second presidential term in January, and after he imposed strict tariffs on countries around the world in April. It is symbolic for this reason, but we think it reinforces our view that tariffs are unlikely to go away anytime soon. Still, markets are cheering the news. The main beneficiary in the FX space has been the US dollar, with GBP/USD erasing its earlier gains to trade closer to $1.32. Elsewhere, sterling appreciated across the board, finally hurdling the €1.18 handle versus the euro and jumping over 1% against the Japanese yen, though these gains have been partially eroded overnight.

The final details of the UK-US trade pact will still be negotiated over the coming weeks, but here’s what we know. The UK steel and aluminium industries will no longer face any tariffs after they had 25% duties placed on them. The deal appears to centre predominantly around cars, the US’ sixth-top export to the UK and the UK’s top export to the US. The first 100,000 vehicles imported into the US by UK car manufacturers each year are subject to the reciprocal rate of 10% and any additional vehicles each year are subject to 25% rates. That’s a change from the 25% tariff in place for foreign cars shipped to the US but still leaves UK carmakers worse off than before.

Moreover, in our view, given 10% tariffs will remain on most other UK goods into the US, this trade deal is not a positive indicator for broader tariff de-escalation. With the US running a $12bn goods trade surplus with Britain in 2024, the UK’s inability to negotiate a lower rate suggests nations with US trade deficits may face even tougher terms.

CPI points to slowing easing cycle

Kevin Ford – FX & Macro Strategist

Mexico’s inflation has settled below 4%, though it still sits above the central bank’s target of 3%. In April, core annual inflation ticked up to 3.93%, slightly above forecasts—with monthly inflation rising by 0.49%. Prices for food, beverages, tobacco, and services have edged higher, even though energy and agricultural goods have dipped slightly. This marks the sharpest annual price increase so far this year, reinforcing many policymakers’ careful approach amid easing trade tensions.

Weak domestic demand and growing economic slack are keeping upward price pressures in check, while lower oil prices and favorable base effects provide some relief. Although last year’s peso depreciation pushed inflation higher, recent peso gains since December suggest these effects may be short-lived. Overall, the latest CPI data point to a cautious outlook when it comes to Banxico’s easing cycle.

A widening negative output gap and slower global growth, fueled by U.S. tariffs, support the idea of lower interest rates, though persistent inflation risks may limit how far rates can drop. Banxico may need to moderate its pace of rate cuts as conditions evolve, while recent Q1 GDP growth and a new fiscal support package are expected to boost domestic demand over the coming months.

The Mexican peso reacted to the CPI data by drifting toward 19.50, its five-year average, and approaching a six-month high. Earlier in the week, the peso tested 19.78 before retreating, showing a steady move toward 19.50 as the week wrapped up. With expectations of a more dovish Banxico, markets are now anticipating a shift in the central bank’s stance as it looks to balance inflation and growth over the medium term.

DXY recovers above the 100 level

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: May 5 – 9

All times are in ET

Have a question? [email protected]

*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quothave a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.

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