Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie, kiwi and yuan pressured as trade war escalates
Global markets took another step lower overnight, snuffing out an initial rally in US markets, with the benchmark S&P 500 down 1.6% and Nasdaq down 2.2%.
However, the losses mask the full extent of the reversal, with the S&P 500 down 5.4% from last night’s highs while the Nasdaq tumbled 6.4% from the day’s best levels.
In FX markets, the focus was on China after the Trump administration responded to Friday’s increase in Chinese tariffs on US goods. The White House said that an additional 50% tariff on Chinese goods would be implemented at midnight on Wednesday (EDT), bringing the total US tariff on Chinese good to 104%.
The Chinese yuan tumbled on the news with the CNH, the offshore currency, falling to the lowest level since it was launched in 2010, as USD/CNH climbed above 7.40 for the first time ever. The CNY neared the lowest level since 2008.
Across the region, the Aussie and kiwi also gave up earlier gains. The AUD/USD ended back below 0.6000 with a 0.6% loss.
The NZD/USD, down 0.4%, continues to hold just above technical support at 0.5500.
US tariffs drive inflation concerns
Chicago Fed President Austan Goolsbee highlighted growing concerns among US business executives regarding the inflationary impact of tariffs. He noted that while recent economic data has been relatively positive, tariffs could disrupt supply chains and potentially reignite inflationary pressures reminiscent of 2021-2022.
This uncertainty has made short-term economic forecasting more challenging.
USD/SGD recently eased from eight-week highs. The next key support levels for USD/SGD are at 50-day EMA 1.3421 and 200-day EMA at 1.3400.
Advances are expected to be corrective, with resistance at 1.3531 marking a potential shift to a positive price momentum if breached.
RBNZ mulls 50bps cut
The Reserve Bank of New Zealand decision will be closely watched today as a potential bellwether on central bank moves – will the RBNZ react to market moves and go big?
New Zealand’s Q1 Quarterly Survey of Business Opinion (QSBO) revealed a sharp drop in pricing intentions, reaching their lowest level since the initial COVID-19 lockdowns in 2020.
The index fell to +2, significantly below its long-term average of 20 and the lowest since 2015, excluding lockdown periods.
This decline suggests that inflationary pressures are easing, with the headline CPI likely to fall short of the Reserve Bank of New Zealand’s (RBNZ) 2025 midpoint target of 2%. Historically, New Zealand’s CPI has averaged 2.4% year-over-year since 1990.
In light of these developments, for the RBNZ rate decision today, a 25bps rate cut to 3.50% is anticipated, with a 50bps cut also being a possibility.
The easing pricing intentions reflect a broader trend of subdued inflation, which could influence the RBNZ’s monetary policy decisions moving forward.
NZD/USD is now near five-year lows of March 2020. Key support level for NZD/USD remains at 0.5500 handle, with next key resistance level at 50-day EMA of 0.5706.
Aussie, kiwi back at lows
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 7 — 11 April
All times AEDT
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.
Leave a Reply