Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
China faces steep US tariffs as markets show resilience
The USD weakened broadly as risk-off sentiment dominated markets amid escalating US-China trade tensions.
The USD index dipped below 101.00 before firming slightly higher by the New York close, extending its decline against most currencies.
The euro was a standout performer, climbing more than 2% to 1.1190, supported by the EU’s decision to delay metal counter-tariffs for 90 days.
The Chinese yuan displayed surprising strength despite confirmation of a 145% US tariff (125% reciprocal + 20% fentanyl), with USDCNH falling 0.45% to 7.3130 during New York hours.
The Australian dollar experienced choppy trading between 0.6180 and 0.6250 throughout the New York session.
In safe havens, the Swiss franc surged 4% while Japanese yen made modest gains as investors sought protection from market volatility.
The S&P 500 fell 3.5% and the tech-heavy Nasdaq dropped 4%, with US Treasury yields rising at the long end despite a strong 30-year bond auction.
US CPI drops below consensus expectations
US inflation came in surprisingly low for March, with headline CPI decreasing 0.05% month-over-month and core CPI rising just 0.06% – both significantly below market consensus.
While housing costs continued to climb with Owner’s Equivalent Rent reaching its highest level since October, this was offset by decreases in transportation services (-1.4%) and used car prices (-0.7%).
For USD/SGD in APAC FX, the pair has corrected to near five-month lows, and the next key support lies at 1.3268.
Conversely, next daily key resistance lies at 200-day EMA of 1.3398, where SGD buyers may look to take advantage.
Aussie jumps on trade pause, but risks remain
The AUD/USD jumped around 5.0% from its Wednesday lows after President Trump’s decision to pause the “reciprocal” components of his tariff plan.
However, risks clearly remain for the Australian dollar. The Aussie’s recent underperformance during the market’s trade worries is similar to its struggles during the US-China trade war in 2018-19.
During that period, between the January 2018 initial tariff announcement on solar panels and washing machines to the January 2020 “phase one” agreement, the AUD/USD fell from above 0.8000 to below 0.6700.
For now, in the short term, markets will be looking to the key technical level at 0.6200. While the AUD/USD remains below this level, the Aussie will be pressured. A move above this level turns the outlook more positive.
Antipodeans up overnight
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 7 — 11 April
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*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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