Currency Archives - Page 23 of 27

Mar 13, 2025 By PARKERYL Currency

Relish the inflation relief while it lasts – United States

Written by the Market Insights Team

Inflation data overshadowed by tariff threat

George Vessey – Lead FX & Macro Strategist

There was a brief reprieve in risk sentiment yesterday following some good news on US inflation. But the rally in stocks and bonds fizzled out as the details of the consumer price inflation prints were less rosy, whilst global trade war fears escalated. The US dollar index snapped a 7-day decline but remains close to pre-election levels. Meanwhile, US producer price inflation data today might muddy the disinflation narrative, which could make life harder for the Federal Reserve (Fed).

Canada and the EU are responding to the blanket US tariffs on steel and aluminium in a sign that the global trade war is ratcheting up. The 3.7% decline in the dollar so far this month, coupled with the falls in US stocks and their under-performance relative to other countries, reflect a remarkable turnaround in investors’ views about the economic outlook for America and Europe. However, a surprisingly cool set of February US consumer price inflation prints m/m pulled the annual rate of headline inflation down to 2.8% from 3% while core inflation dips to 3.1% from 3.3%. This halted the stock selloff that had put the S&P 500 on the verge of a correction. The details are less rosy though with a substantial 4% m/m drop in air fares (highly volatile) the main factor driving the softer inflation readings. Moreover, there’s brewing anecdotal evidence of firms pre-emptively raising prices ahead of potential tariffs with this week’s NFIB survey reporting a 10 point jump in the proportion of companies raising prices. The risk here is that core inflation starts to reverse and move higher again in coming months.

Tariff fears are already seeing companies nudging prices higher and risk higher inflation readings over the summer, which would further complicate the Fed’s policy decision making amidst growing recession fears. In addition, key components from the producer price index, published today, that enter into the Fed’s preferred inflation measure, are expected to have accelerated from January. This will make it harder for the Fed to cut despite slowing US economic activity. Thus, the outlook for equities and broader risk appetite remains grim.

Chart of NFIB survey and core US inflation

Will Trump stop the euro rally?

Boris Kovacevic – Global Macro Strategist

The euro’s rally lost some momentum yesterday, slipping below the $1.09 mark. While broader risk sentiment improved after softer US inflation data, European markets faced renewed trade tensions and political uncertainty. President Trump made it clear that he intends to retaliate against the EU’s countermeasures on his 25% steel and aluminum tariffs. This tit-for-tat will raise the already elevated tensions between both regions and could limit the upside on the euro for now.

Meanwhile, German bond markets continue to send a strong signal. The 10-year Bund yield surged past 2.9%, reaching its highest level in nearly 13 years as negotiations over expanded government borrowing intensified. The Greens remain hesitant to fully back the fiscal expansion proposed by the CDU/CSU-led coalition, but alternative proposals suggest a compromise could be within reach. If secured, this could pave the way for a significant boost to Germany’s defense and infrastructure spending—an economic shift that has already started to reshape investor sentiment toward the Eurozone.

For now, EUR/USD remains supported by the broader shift in sentiment away from the dollar, but trade risks are becoming harder to ignore. If Trump retaliates further, it could weigh on European equities and the euro in the short term. However, if a German fiscal deal comes through, it may provide another boost for European assets, especially as US growth concerns mount. Investors will closely watch any new developments on both fronts in the coming days.

Within a whisker of $1.30

George Vessey – Lead FX & Macro Strategist

Sterling climbed to a fresh 3-month peak of $1.2988 on Wednesday, within a whisker of the key $1.30 level, which it has been below for 60% of the time over the past five years. GBP/USD is up 3% month-to-date, and almost two cents above its 5-year average of $1.28, but is still trading within the overbought zone indicated by the 14-day relative strength index. GBP/EUR also snapped a run of six consecutive daily losses as focus turned to EU-US trade war risks following the EU’s retaliation to US tariffs.

While downside risks for the euro and Eurozone economy have diminished due to hopes of huge fiscal reforms, the tariff theme remains a significant near-term risk for the common currency, which appears to be limiting the euro’s gains against the pound. We’re still keeping a close eye on the 50-week moving average, currently located at €1.1888. If GBP/EUR closes the week below this level, we think a slide towards €1.1740 is feasible over the coming month. Otherwise, the pair might stay bound to a tight range given real rate differentials suggests €1.19 is fair value. We think there may be more scope of the pound to stay resilient against the dollar though as currency traders parse where relative interest rates are likely headed over the next six months. Both the Fed and Bank of England (BoE) meet next week, and whilst there’s little chance that either central bank will cut, markets are pricing in around three cuts by the Fed later this year versus an expectation of just two by the BoE.

Indeed, with UK inflation having bounced back and inflation breakeven rates suggesting that increases in retail prices over the next two years are likely to hover close to 4%, the BoE may well decide to defer its next rate reduction. This has already sent nominal yields in the UK relative to those in the US surging in recent weeks, underpinning GBP/USD. As mentioned above though, the pound is in overbought territory so is vulnerable to traders taking some money off the table in the very short term.

US equities swing 5% in seven days

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

All times are in GMT

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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Mar 12, 2025 By PARKERYL Currency

USD rebounds from lows as CPI drop calms markets – United States

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

Markets pause selling as US inflation cools

Global markets calmed overnight after a month-long sell-off saw the benchmark US S&P 500 fall more than 10% from recent highs – one definition of a correction – with US tech stocks falling even further.

Markets were helped higher overnight by a lower-than-expected US inflation reading.

Headline annual inflation fell from 3.0% in January to 2.8% in February while the core measure dropped from 3.3% to 3.1%. A jump in inflation in the January report had spooked markets last month.

The US’s S&P 500 climbed 0.5% overnight while the tech-focused Nasdaq gained 1.2%. European stocks also gained.

The US dollar had recently fallen in line with US stockmarket weakness as markets worried about the potential for a US economic slowdown.

Overnight, however, the greenback gained, with the USD index climbing from four-month lows. There remains the potential for a broader reversal higher as momentum indicators, like the relative strength index, signal the recent move lower in the greenback is stretched.

The Australian outperformed in line with gains in equity markets. The AUD/USD climbed 0.5% but remains within the trading range between 0.6200 and 0.6400.

The USD/SGD and USD/CNH both climbed from lows in line with US dollar strength,

Euro slips ahead of industrial production

The euro was mostly weaker overnight as it retraced some of last week’s record-breaking gains.

Today, the industrial production in the Euro region will be announced at 21:00 AEDT.

We forecast that in January, industrial production in the euro region will decrease by 0.1% month over month.

For now, the EUR/USD maintains its positive trend despite weak Eurozone industrial production, as the pair remains supported above the critical 1.05–1.06 level.

Market focus now shifts to resistance near the 1.1276 July 2023 peak, with momentum favouring further upside.

However, weaker European economic data could spark near-term volatility.

Last week, the EUR outperformed notably thanks to fiscal optimism on German military spending would boost demand.

For EUR/SGD, next strong key weekly resistance at 200-day EMA of 1.4654 — the best level for EUR sellers since July 2022.

Kiwi pressured as credit card spending falls

The NZD/USD gained 0.2% yesterday but underperformed versus the Australian dollar.

New Zealand’s February credit card sales reported yesterday, dropping 4.2% year over year, due to a weak economy and a decline in foreign travel.

Core retail sales, which do not include vehicle and gasoline, decreased 3.1%. According to Retail NZ, foreign travel typically peaks in February, and with arrivals at around 80% of pre-COVID levels, brick and mortar stores are suffering from the decreased foot traffic.

NZD/USD is trading within the 30-day tight trading range between 0.56 and 0.58, as declining domestic retail sales weigh on the kiwi.

The pair remains sensitive to external factors, with risk sentiment playing a pivotal role.

Sustained weakness in New Zealand’s domestic economy could increase downside pressure.

Any move above the recent trading range in NZD/USD could test the daily 200-day EMA resistance of 0.5870.

Greenback climbs from four-month lows

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 10 – 15 March

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.

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Mar 12, 2025 By PARKERYL Currency

US-Canada trade war intensifies – United States

Written by the Market Insights Team

Half a day twists and turns

Kevin Ford –FX & Macro Strategist

Yesterday, the USD/CAD experienced significant intraday volatility due to escalating trade tensions initiated by President Trump and subsequent de-escalation by Ontario Premier Doug Ford. Initially, Trump raised tariffs to 50% on all aluminum and steel imports from Canada, following Ford’s refusal to withdraw a 25% electricity tariff on US exports. This tariff particularly would have impacted electricity sales to 1.5 million homes and businesses across Michigan, Minnesota, and New York. Later, Ford announced on social media that the 25% electricity surcharge would be scrapped.

Despite this half a day trade war spat, uncertainty lingers over the tariff situation. Markets are awaiting confirmation on whether steel and aluminum tariffs will be postponed, and/or if some countries will be exempted, especially given President Trump’s recurring tariff pattern of impose and delay. For now, the 25% tariffs on steel and aluminum are in effect as of today. Aluminum and steel, critical materials, have far-reaching economic implications. With US industry capacity exceeding 75% for both metals and heavy reliance on Canadian imports, (imports made up 23% of the U.S. steel market in 2024 and 44% of U.S. aluminum market, and half of those imports coming from Canada), tariff hikes are likely to drive up prices and the impact might be felt beyond aluminum and steel. Tariffs ripple through supply chains, increasing costs across various industries and items such as housing, household appliances, construction equipment, farm machinery, batteries, and vehicles, as many specialty steel products for the automotive industry are unavailable domestically. Also, increasing internal capacity would take years for some companies. If history serves as an example, during 2018, when then President Trump imposed 25% steel and aluminum tariffs, metal prices increased and there was little sector job creation during the time.

The USD/CAD has attempted to break above the 1.454 level four times in the past six days without success. Prices holding above 1.447 signal CAD bearishness, shifting risks to the upside. The coming days will be crucial in assessing whether Trump proceeds with metals tariffs. Also, today we’ll see how markets respond to the US CPI data, the BoC’s rate decision and Governor Tiff Macklem press conference. As mentioned previously, US CPI is expected to come at 2.9% YoY and markets are expecting BoC to cut rates 25 bps to 2.75%.

Dollar not profiting from tariff angst

Boris Kovacevic – Global Macro Strategist

The US dollar fell against most major currencies yesterday, despite another wave of risk aversion gripping global markets. Traditionally, escalating trade tensions would drive demand for the dollar as a safe-haven asset, but investors are now looking beyond short-term flows and focusing on the economic damage these tariffs could inflict. The market reaction suggests that concerns over weaker US growth and corporate profitability are beginning to outweigh the immediate defensive bid for the dollar. The Greenback has fallen for seven consecutive days and is down 6.5% from its 2025 peak.

President Trump’s latest tariff escalation has further rattled financial markets. Just days after imposing broad duties on Canadian and Mexican imports, Trump announced he would double planned steel and aluminum tariffs on Canada to 50% in response to Ontario’s tax hike on electricity exports. This move has sent shockwaves through equities, with the S&P 500 extending its three-week decline to nearly 10%, while Wall Street’s fear gauge (VIX) surged toward its highest level since last August. The Canadian dollar tumbled to a weekly low, highlighting the over proportional impact of trade tensions on American (North & Central) currencies.

Beyond tariffs, yesterday’s macro data reinforced mixed signals about the US economy. The NFIB Small Business Optimism Index fell to 100.7, its weakest level since October 2024, as uncertainty among business owners surged to near-record highs. Small firms are growing increasingly concerned about inflation and labor quality, while their confidence in future economic conditions has deteriorated sharply. At the same time, however, the JOLTS report showed job openings climbing to 7.74 million, suggesting that labor demand remains resilient in key sectors like retail, finance, and healthcare.

Looking ahead, the focus remains on US inflation data, central bank commentary, and geopolitical risks. The dollar’s recent weakness could persist if trade concerns continue to weigh on economic sentiment and corporate outlooks, particularly as investors reassess the balance between short-term positioning and longer-term fundamentals.

Euro continues its surge

Boris Kovacevic – Global Macro Strategist

The euro continued its remarkable surge against the dollar, breaking through the $1.09 barrier for the first time since Trump’s election. The currency is up more than 5.5% this month as investor sentiment shifts away from the US, weighed down by recession fears and continued trade policy uncertainty.

The latest catalyst for the euro’s rally comes from Germany, where negotiations over a historic fiscal expansion are progressing. Franziska Brantner, co-leader of the Greens, signaled a willingness to negotiate a deal on increased state borrowing to finance defence spending and economic revival. While the details remain unclear, markets welcomed the prospect of higher fiscal stimulus, which, when combined with ECB rate cuts, creates a rare case of simultaneous monetary and fiscal support for the eurozone economy.

The political backdrop in Europe is fueling this divergence between the euro and the dollar. Germany’s debt policy overhaul remains the focal point, with expectations of a spending package that could significantly raise borrowing and boost investment over the next decade. However, political hurdles remain, with the Greens still opposing broader reforms to debt rules and a €500 billion infrastructure fund. Markets will be closely watching for any deal before the weekend, as its approval could provide another leg higher for the euro.

The combination of US economic weakness, ongoing tariff uncertainty, and a growing policy divergence between the Fed and ECB is eroding confidence in the greenback. For now, euro bulls are in control, with traders looking for confirmation of a German fiscal deal and further signs that the US economy is cooling.

Look over your shoulder sterling

George Vessey – Lead FX & Macro Strategist

Since the start of 2023, GBP/USD has mostly been in positive territory, clocking up to 11% gains by September 2024. The same can’t be said for EUR/USD, which only reached 5% gains, significantly underperforming in comparison. Historically the two currency pairs have exhibited a high correlation, explained by the interconnective relationship between the euro area and UK economies. The correlation remains strong, but the euro is now playing catch up.

Aside from recent US dollar weakness driven by the fading US exceptionalism narrative, the pound has likely been dragged higher by the fiscal re-rating of Europe. But of course, it’s the euro that’s benefited most from Germany’s historic stimulus package that includes a debt-brake reform to boost spending on defence and infrastructure. After last week’s seismic shift in euro sentiment, EUR/USD now stands over 5% higher this month alone compared to GBP/USD’s less than 3% gain.

Looking back over the last two years, the pound has enjoyed a high yield advantage over many peers, supporting GBP/USD’s outperformance relative to EUR/USD. It’s also spurred GBP/EUR on to scale 2-year peaks recently. But the tables seem to be turning. The euro could be primed for a continued spell of outperformance versus its major peers like sterling as Europe’s growth outlook looks set to improve whilst German yields surge higher.

GBP/EUR is already down 2.2% this month and has broken below its 50-week moving average support level for the first time in a year, which could open the door to an extended slide towards €1.17. Moreover, whilst the strong positive correlation between EUR/USD and GBP/USD will hold, we think the euro has more scope to run higher than sterling does against the dollar.

Euro dominates across the board

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

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.

Source link

Mar 12, 2025 By PARKERYL Currency

Trump bump flips to slump – United States

Written by the Market Insights Team

After a stellar 8% rise in 2024, boosted by the so-called “Trump trade” in the final few months, the dollar is now weaker than all of its G10 peers year-to-date. Equities have taken an abrupt turn for the worse, with some US indices suffering their biggest daily falls since 2022 and entering correction territory – defined by a 10% drawdown from their peak. It’s the US President’s ever-changing tariff policy driving uncertainty and raising recession fears that has businesses and investors on edge.

Dollar not profiting from tariff angst

Boris Kovacevic – Global Macro Strategist

The US dollar fell against most major currencies yesterday, despite another wave of risk aversion gripping global markets. Traditionally, escalating trade tensions would drive demand for the dollar as a safe-haven asset, but investors are now looking beyond short-term flows and focusing on the economic damage these tariffs could inflict. The market reaction suggests that concerns over weaker US growth and corporate profitability are beginning to outweigh the immediate defensive bid for the dollar. The Greenback has fallen for seven consecutive days and is down 6.5% from its 2025 peak.

President Trump’s latest tariff escalation has further rattled financial markets. Just days after imposing broad duties on Canadian and Mexican imports, Trump announced he would double planned steel and aluminum tariffs on Canada to 50% in response to Ontario’s tax hike on electricity exports. This move has sent shockwaves through equities, with the S&P 500 extending its three-week decline to nearly 10%, while Wall Street’s fear gauge (VIX) surged toward its highest level since last August. The Canadian dollar tumbled to a weekly low, highlighting the over proportional impact of trade tensions on American (North & Central) currencies.

Beyond tariffs, yesterday’s macro data reinforced mixed signals about the US economy. The NFIB Small Business Optimism Index fell to 100.7, its weakest level since October 2024, as uncertainty among business owners surged to near-record highs. Small firms are growing increasingly concerned about inflation and labor quality, while their confidence in future economic conditions has deteriorated sharply. At the same time, however, the JOLTS report showed job openings climbing to 7.74 million, suggesting that labor demand remains resilient in key sectors like retail, finance, and healthcare.

Looking ahead, the focus remains on US inflation data, central bank commentary, and geopolitical risks. The dollar’s recent weakness could persist if trade concerns continue to weigh on economic sentiment and corporate outlooks, particularly as investors reassess the balance between short-term positioning and longer-term fundamentals.

Euro continues its surge

Boris Kovacevic – Global Macro Strategist

The euro continued its remarkable surge against the dollar, breaking through the $1.09 barrier for the first time since Trump’s election. The currency is up more than 5.5% this month as investor sentiment shifts away from the US, weighed down by recession fears and continued trade policy uncertainty.

The latest catalyst for the euro’s rally comes from Germany, where negotiations over a historic fiscal expansion are progressing. Franziska Brantner, co-leader of the Greens, signaled a willingness to negotiate a deal on increased state borrowing to finance defence spending and economic revival. While the details remain unclear, markets welcomed the prospect of higher fiscal stimulus, which, when combined with ECB rate cuts, creates a rare case of simultaneous monetary and fiscal support for the eurozone economy.

The political backdrop in Europe is fueling this divergence between the euro and the dollar. Germany’s debt policy overhaul remains the focal point, with expectations of a spending package that could significantly raise borrowing and boost investment over the next decade. However, political hurdles remain, with the Greens still opposing broader reforms to debt rules and a €500 billion infrastructure fund. Markets will be closely watching for any deal before the weekend, as its approval could provide another leg higher for the euro.

The combination of US economic weakness, ongoing tariff uncertainty, and a growing policy divergence between the Fed and ECB is eroding confidence in the greenback. For now, euro bulls are in control, with traders looking for confirmation of a German fiscal deal and further signs that the US economy is cooling.

Look over your shoulder sterling

George Vessey – Lead FX & Macro Strategist

Since the start of 2023, GBP/USD has mostly been in positive territory, clocking up to 11% gains by September 2024. The same can’t be said for EUR/USD, which only reached 5% gains, significantly underperforming in comparison. Historically the two currency pairs have exhibited a high correlation, explained by the interconnective relationship between the euro area and UK economies. The correlation remains strong, but the euro is now playing catch up.

Aside from recent US dollar weakness driven by the fading US exceptionalism narrative, the pound has likely been dragged higher by the fiscal re-rating of Europe. But of course, it’s the euro that’s benefited most from Germany’s historic stimulus package that includes a debt-brake reform to boost spending on defence and infrastructure. After last week’s seismic shift in euro sentiment, EUR/USD now stands over 5% higher this month alone compared to GBP/USD’s less than 3% gain.

Looking back over the last two years, the pound has enjoyed a high yield advantage over many peers, supporting GBP/USD’s outperformance relative to EUR/USD. It’s also spurred GBP/EUR on to scale 2-year peaks recently. But the tables seem to be turning. The euro could be primed for a continued spell of outperformance versus its major peers like sterling as Europe’s growth outlook looks set to improve whilst German yields surge higher.

GBP/EUR is already down 2.2% this month and has broken below its 50-week moving average support level for the first time in a year, which could open the door to an extended slide towards €1.17. Moreover, whilst the strong positive correlation between EUR/USD and GBP/USD will hold, we think the euro has more scope to run higher than sterling does against the dollar.

Euro dominates across the board

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

All times are in GMT

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

Mar 12, 2025 By PARKERYL Currency

Economic sanctions and trade restrictions – February update – United States

In today’s fast-paced global market, staying current on sanctions updates is critical for businesses engaged in cross-border payments. Recent developments from U.S. and U.K. authorities—as well as actions by the European Union—underscore the dynamic nature of the regulatory landscape. Below we break down the key updates announced in January 2025 and what they mean for your business operations.

U.S. Treasury expands authorizations for activities and transactions in Syria

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Syria General License (GL) 24, expanding authorizations for activities and transactions in Syria, effective December 8, 2024. This action underscores the United States’ commitment to ensuring that U.S. sanctions do not impede activities to meet basic human needs or humanitarian assistance.

This authorization is in effect for six months, as the U.S. government continues to monitor the situation. GL 24 helps ensure that sanctions do not impede essential services and continuity of governance functions across Syria, including the provision of electricity, energy, water, and sanitation. Get all the details in the official announcement.

UK sanctions guidance: Countering evasion and no-Russia clause

The Office of Trade Sanctions Implementation (OTSI) has published two documents to aid compliance with UK sanctions against Russia. “Countering Russian Sanctions Evasion” guides exporters and manufacturers in identifying circumvention tactics, recognizing high-risk goods, spotting red flags, and enhancing due diligence to aid businesses in managing their risk and meeting their compliance obligations.

The UK government has also issued a “No-Russia Clause” which assists exporters in tailoring contracts to include provisions that prevent re-export to Russia. Prohibitions in the UK’s Russia sanctions regime also typically prohibit export ‘for use in’ Russia. Even if the immediate destination of the relevant goods is not Russia, the prohibition may still apply. UK’s trade sanctions on Russia seek to deny Russia access to the goods, technologies, services, and revenue necessary to pursue its illegal war.

Direct trade between the UK and Russia has fallen heavily since sanctions were introduced. However, Russia has been seeking to procure goods and services via indirect routes and complex supply chains. This heightens the risk of circumvention of trade sanctions, and diversion of goods to Russia.

US Treasury sanctions Russia’s energy sector

The U.S. Department of the Treasury (OFAC) and the UK’s Office of Financial Sanctions Implementation (OFSI) have announced sweeping sanctions targeting Russia’s energy sector to diminish revenue for its war against Ukraine. The sanctions, fulfilling a G7 commitment, impact major oil producers Gazprom Neft and Surgutneftegas, over 180 vessels (including those in the “shadow fleet”), oil traders, service providers, and energy officials.

A new determination authorizes sanctions on anyone operating in Russia’s energy sector, increasing risks for those involved in the Russian oil trade. The UK is joining the US in sanctioning major Russian oil producers. Treasury also issued amended General License 8L, which authorizes certain wind-down transactions related to energy through March 12, 2025.

Strengthening collaboration on economic sanctions

The Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury and the Office of Financial Sanctions Implementation (OFSI) of the UK have established a Memorandum of Understanding to enhance their collaborative relationship. This arrangement aims to advance their shared goal of enforcing and promoting compliance with economic and trade sanctions.

The Memorandum facilitates the sharing of relevant information, coordination of investigations, personnel training, and discussions on regulatory expectations. It outlines terms and conditions for cooperation, ensuring compliance with applicable laws and regulations. Information sharing will adhere to strict controls and safeguards, with mechanisms for handling unauthorized disclosures. The agreement also establishes contact points for efficient communication and designates coordinators to oversee its implementation.

While not legally binding, the Memorandum signifies a commitment to cooperation, allowing for amendments, suspension, or termination by either participant.

Family International Realty LLC fined for sanctions evasion

OFAC has announced that Family International Realty LLC and its owner have agreed to pay $1,076,923 to settle potential civil liability for violating Ukraine-/Russia-related sanctions. Between 2018 and 2023, they executed a scheme to evade sanctions by transferring ownership of luxury condominiums owned by sanctioned Russian oligarchs Valeri Abramov and Viktor Perevalov to family members and shell companies. This was done to obscure the oligarchs’ interests and facilitate rentals and sales, generating approximately $182,442 in commissions and reimbursements for the company. The settlement reflects that the violations were egregious and not self-disclosed, also considering the owner’s resolution of related criminal charges.

Haas Automation settles with OFAC for sanctions violations

Haas Automation, Inc. has agreed to pay $1,044,781 to settle potential civil liability for 21 apparent violations of Ukraine-/Russia-related sanctions. Between December 2019 and March 2022, Haas indirectly supplied a computer numerical control (CNC) machine, spare parts, and authorization codes to blocked Russian entities through its Russian distributor, Abamet Management Limited.

The U.S. Office of Foreign Assets Control (OFAC) determined that Haas did not voluntarily disclose the violations and that eight of them were egregious. OFAC considered Haas’s remedial efforts and cooperation as mitigating factors. Haas is also settling with the Bureau of Industry and Security (BIS) for $1,500,000. Further details are available in the enforcement release.

Executive Order 14148: Rescinding prior actions

On January 24, President Trump signed a new Executive Order (E.O.), “Initial Rescissions Of Harmful Executive Orders And Actions,” which, among other actions, revoked E.O. 14115, “Imposing Certain Sanctions on Persons Undermining Peace, Security, and Stability in the West Bank.” To implement the President’s revocation of E.O. 14115, OFAC removed the West Bank-Related Sanctions program from its website and removed all persons designated under E.O. 14115 from the Specially Designated Nationals and Blocked Persons List (SDN List). All property and interests in property blocked under E.O. 14115 are now unblocked.

EU prolongs economic sanctions against Russia

The Council of the European Union has extended its economic sanctions targeting specific sectors of the Russian economy for another six months, lasting until July 31, 2025. These measures, initially introduced in 2014 in response to Russia’s actions in Ukraine, were significantly expanded following Russia’s full-scale invasion in February 2022. The sanctions aim to weaken Russia’s ability to finance the war and apply pressure to change its policies. They encompass restrictions on trade, finance, technology, and dual-use goods. The EU remains steadfast in its condemnation of Russia’s aggression and unwavering support for Ukraine’s sovereignty and territorial integrity. Read the full announcement for more detail.

Navigating the latest sanctions updates in cross-border payments

Staying ahead of sanctions updates isn’t just about avoiding penalties, it’s about safeguarding your business reputation and ensuring seamless international operations. As regulatory landscapes evolve, proactive compliance becomes an essential element of strategic growth.

In an era of rapid regulatory change, your ability to adapt and stay informed is key to maintaining a competitive edge and protecting your bottom line. For companies navigating cross-border payments, these updates serve as a crucial reminder to:

Enhance compliance frameworks:
Regularly update your internal policies and due diligence processes considering new sanctions guidance and enforcement actions.

Invest in training:
Ensure that your teams are well-versed in the latest regulatory changes. Training can help identify red flags and prevent inadvertent sanctions breaches.

Leverage technology:
Utilize advanced compliance tools to monitor transactions, screen counterparties, and flag any activities that may fall under evolving sanctions regimes.

Maintain open channels:
Engage with legal and regulatory experts to continuously assess your exposure and adapt to the shifting sanctions landscape.

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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Mar 11, 2025 By PARKERYL Currency

Greenback drops to October lows as recession worries dominate – United States

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

USD hits pre-election lows

Global markets fell again yesterday with the US’s Dow Jones down 1.1%, UK’s FTSE 100 falling 1.2% and Japan’s Nikkei dropping 0.6%.

Rising global recession fears, equity market volatility and weaker growth indicators have driven a shift toward safe-haven assets with the Japanese yen and Swiss franc outperforming.

Unusually, the US dollar has not benefited from these safe-haven flows, with markets instead worried about the prospects for US growth.

The AUD/USD climbed from one-week lows with a 0.2% gain but remains broadly within the six-week old trading range between 0.6200 and 0.6400.

Similarly, the NZD/USD recovered within its recent trading range between 0.5600 and 0.5775.

In Asia, the moves were more significant. USD/SGD fell back to the lowest level since 11 November.

The USD/CNH fell to the lowest level since 19 November.

US inflation in focus tonight

Technically, the US dollar index remains relatively weak with the market still below its 50-day and 200-day EMAs.

Tonight, US consumer prices will be revealed at 11:30pm AEDT.

After a robust reading of 0.446% in January, core CPI inflation probably slowed somewhat to 0.287% m-o-m in February, although it most certainly stayed above the December level of 0.210%.

We anticipate that core PCE inflation (to be released later this month) stayed high in February at 0.282% m-o-m.

The Fed will probably continue to monitor inflation concerns if the print matches our prediction.

The USD index is now at a four-month low, with next key support at its weekly 200-day EMA of 102.58.

Korea’s artificial job market masks KRW weakness

Today, the Korea unemployment rate will be revealed at 10:00 AEDT. As the labor market improves, we anticipate that the unemployment rate will slightly decline once again, from 2.9% in January to 2.8% SA in February.

The service sector probably kept adding employment as a result of the government’s frontloading fiscal expenditures, offsetting job losses in the manufacturing and construction sectors.

We retain negative outlook on KRW, which may see USD/KRW move higher in the short-term.

USDKRW is currently at its three-month low. The USDKRW pair has rebounded from its 50-day EMA support of 1443.09, which may be attractive to USD buyers.

The next level of key support for USDKRW is at its 200-day EMA of 1403.63.

USD sees losses across Asia

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 10 – 15 March

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.

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Mar 11, 2025 By PARKERYL Currency

Bid for safe haven in FX markets – United States

Written by the Market Insights Team

The sting of market ‘detox’

Kevin Ford –FX & Macro Strategist

The withdrawal symptoms from the “detox” period that Treasury Secretary Scott Bessent predicted for the economy and markets are proving to be jittery and turbulent, particularly for U.S. equity markets. Over the past week, heightened risk aversion has driven a strong bid for safe-haven assets as sentiment remains skewed toward negative news. In the FX space, currencies like the Japanese Yen and Swiss Franc have appreciated against the greenback, which continues to face negative sentiment.

Spring-forward and markets woke up on the wrong side of bed yesterday following a significant sell-off in U.S. equities. Concerns about the economic impact of tariffs and federal government spending cuts persist. The only developments that might stabilize markets are a reversal of tariff policies or swift approval of tax and deregulation measures. However, the former appears highly unlikely, and with less than a week remaining to avert a U.S. government shutdown, uncertainty surrounds the timeline for approving President Trump’s budget.

Revisiting the ongoing tariff story, here’s a quick recap of last week’s developments:

– Tuesday: The U.S. imposed a 25% tariff on Mexico-Canada trade.

– Thursday: Trump announced a delay for all CUSMA/USMCA-compliant trade items until April 2^nd. The positive news for Canadian exporters, is that over 40% of trade already meets compliance standards, with the majority of the remaining items likely to follow soon.

– Friday: President Trump signaled the possibility of new tariffs on Canadian dairy and lumber imports, scheduled to take effect on April 2^nd. Adding to the tension, China announced steep import levies on Canadian agricultural goods, including a 100% tariff on rapeseed oil, oil cakes, and peas, alongside a 25% duty on aquatic products and pork, effective March 20th.

Currently, a 10% tariff applies to Canadian energy products not covered by USMCA preferences, while aluminum and steel tariffs of 25% are set to begin tomorrow. By April 2^nd, clarity is expected on whether the 25% Mexico-Canada tariff will be rescinded or if sector-specific targeting, including dairy and lumber, will proceed alongside other reciprocal tariffs.

The Bank of Canada (BoC) is set to meet tomorrow and will likely address these escalating tariff tensions. A potential rate cut to the midpoint of their neutral range is on the table, with the possibility of a more aggressive easing cycle if broad tariffs persist. For investors, it is important to recognize that a definitive resolution to the regional trade dispute may not materialize until CUSMA/USMCA is renegotiated. Even in the absence of sustained tariffs, a clear resolution appears unlikely in the near term.

Volatility jumps on economic jitters

George Vessey – Lead FX & Macro Strategist

US stocks are heading toward their worst start to a presidential term since 2009, weighed down by recession fears and related uncertainty around tariffs. The Nasdaq 100 sank up to 4% on Monday, its worst day since 2022, while the S&P 500 extended its slide from a record to 8% and closed below its 200-day moving average for the first time since November 2023. Benchmark Treasury yields plunged as bets on supportive Federal Reserve (Fed) rate cuts rose, whilst the US dollar index steadied after suffering its worst week in two years.

US President Donald Trump’s shifting stance on tariffs has been stoking anxiety across financial markets for some time. But more recently, it’s raising concerns that policy uncertainty could tip the US economy into a recession. Indeed, Trump refused to rule out the possibility of a recession in an interview over the weekend, dismissing business concerns over lack of clarity on his tariff plans. This intensified speculation that short term economic pain will be tolerated by his administration in pursuit of longer term goals. Amidst the uncertainty around trade policy, sticky inflation and the unknown pace of the Fed’s interest-rate easing cycle, investors should anticipate continued volatility. We’ve already seen the VIX index, a gauge of expected volatility in the S&P 500 jump to its highest level since December. Implied volatility in the currency space has risen, but remains far from the 2022 and 2020 peaks.

The fundamentals of the Trump plan of deregulation and tax cuts were supposed to be dollar positive, but the execution of his plan with tariffs has soured the market mood and looks like it’s now dollar negative. In the very short term, a consolidation phase or slight correction higher looks feasible for the dollar after last week’s turbulence but we think we’ve already seen peak dollar strength for 2025. US JOLTS job openings data today followed by inflation data on Wednesday will be closely monitored on the data docket.

A watershed moment for the euro

George Vessey – Lead FX & Macro Strategist

After its best week since March 2009, EUR/USD’s momentum looks to be waning given the pair now sits in the overbought zone on the daily chart. Still, a high of $1.0875 today is almost five cents greater than where it was trading this time last week. We may be in for a short period of consolidation before another leg higher, but a few bullish factors remain in focus.

As we’ve reported, the EU plans to adjust fiscal rules to ramp up spending and that has sent yields soaring across Europe but has also fuelled optimism about a boost to the region’s economy. A report that Germany’s Green Party is ready to negotiate and see chances for an agreement over the defence spending by the end of this week is boosting this narrative. The theme may get some fresh impetus from potential US-Ukraine negotiations on Wednesday and further details about provisions by EU states for increased defence spending, including in support of Ukraine. However, there is a hint of overexuberance in the short term because of the slow transmission from an expansionary fiscal policy into growth and ECB’s reaction function. Plus, let’s not forget that a trade war might still be heading Europe’s way. Hence, further gains for the common currency are also going to rely on a continuation of the US slowdown story. One thing seems certain though, the narrative of independent US and European stories stands to lift FX volatility.

In the absence of top-tier economic data from Europe today, focus will also be on ECB speakers. After last Thursday’s interest rate cut, traders are now only fully pricing in one further quarter-point reduction in 2025, which would take the deposit rate to 2.25%. About a week ago they had fully priced in the rate moving to 2% by December.

Sterling testing key support versus euro

George Vessey – Lead FX & Macro Strategist

The pound is testing its supportive 50-week moving average against the euro this morning. A close below could open up the door to €1.1740 as German and UK yields narrow and prospects for Eurozone growth look stronger in the wake of the bazooka spending plans from Europe. Meanwhile, GBP/USD upside traction has stalled, with the pair perched near the $1.29 handle after last week’s massive 2.7% climb.

With US recession risks rising, the risk sensitive pound lost the most ground against the Japanese yen yesterday as heightened risk aversion drove demand for safe-haven currencies. Although the UK looks better positioned to avert tariffs from the US due to its goods trade deficit, the pound is likely to remain vulnerable via the risk sentiment channel due to its worsening net international investment position and the fact it has a persistent current account deficit. This means sterling is reliant on foreign capital inflows, which often dry up when the market mood turns sour.

Meanwhile, on the macro front, data early this morning showed retail sales in the UK rose by 0.9% y/y in February, a sharp slowdown from January’s 2.5% gain and well below the expected 2.4% increase. Consumers continued to cut back on purchases amid the ongoing cost-of-living crisis. UK GDP figures later this week will be in spotlight for pound traders.

Equities, oil and yields tumbling

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

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.

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Mar 11, 2025 By PARKERYL Currency

Worst start to a presidential term since 2009 – United States

Volatility jumps on economic jitters

George Vessey – Lead FX & Macro Strategist

US stocks are heading toward their worst start to a presidential term since 2009, weighed down by recession fears and related uncertainty around tariffs. The Nasdaq 100 sank up to 4% on Monday, its worst day since 2022, while the S&P 500 extended its slide from a record to 8% and closed below its 200-day moving average for the first time since November 2023. Benchmark Treasury yields plunged as bets on supportive Federal Reserve (Fed) rate cuts rose, whilst the US dollar index steadied after suffering its worst week in two years.

US President Donald Trump’s shifting stance on tariffs has been stoking anxiety across financial markets for some time. But more recently, it’s raising concerns that policy uncertainty could tip the US economy into a recession. Indeed, Trump refused to rule out the possibility of a recession in an interview over the weekend, dismissing business concerns over lack of clarity on his tariff plans. This intensified speculation that short term economic pain will be tolerated by his administration in pursuit of longer term goals. Amidst the uncertainty around trade policy, sticky inflation and the unknown pace of the Fed’s interest-rate easing cycle, investors should anticipate continued volatility. We’ve already seen the VIX index, a gauge of expected volatility in the S&P 500 jump to its highest level since December. Implied volatility in the currency space has risen, but remains far from the 2022 and 2020 peaks.

The fundamentals of the Trump plan of deregulation and tax cuts were supposed to be dollar positive, but the execution of his plan with tariffs has soured the market mood and looks like it’s now dollar negative. In the very short term, a consolidation phase or slight correction higher looks feasible for the dollar after last week’s turbulence but we think we’ve already seen peak dollar strength for 2025. US JOLTS job openings data today followed by inflation data on Wednesday will be closely monitored on the data docket.

A watershed moment for the euro

George Vessey – Lead FX & Macro Strategist

After its best week since March 2009, EUR/USD’s momentum looks to be waning given the pair now sits in the overbought zone on the daily chart. Still, a high of $1.0875 today is almost five cents greater than where it was trading this time last week. We may be in for a short period of consolidation before another leg higher, but a few bullish factors remain in focus.

As we’ve reported, the EU plans to adjust fiscal rules to ramp up spending and that has sent yields soaring across Europe but has also fuelled optimism about a boost to the region’s economy. A report that Germany’s Green Party is ready to negotiate and see chances for an agreement over the defence spending by the end of this week is boosting this narrative. The theme may get some fresh impetus from potential US-Ukraine negotiations on Wednesday and further details about provisions by EU states for increased defence spending, including in support of Ukraine. However, there is a hint of overexuberance in the short term because of the slow transmission from an expansionary fiscal policy into growth and ECB’s reaction function. Plus, let’s not forget that a trade war might still be heading Europe’s way. Hence, further gains for the common currency are also going to rely on a continuation of the US slowdown story. One thing seems certain though, the narrative of independent US and European stories stands to lift FX volatility.

In the absence of top-tier economic data from Europe today, focus will also be on ECB speakers. After last Thursday’s interest rate cut, traders are now only fully pricing in one further quarter-point reduction in 2025, which would take the deposit rate to 2.25%. About a week ago they had fully priced in the rate moving to 2% by December.

Sterling testing key support versus euro

George Vessey – Lead FX & Macro Strategist

The pound is testing its supportive 50-week moving average against the euro this morning. A close below could open up the door to €1.1740 as German and UK yields narrow and prospects for Eurozone growth look stronger in the wake of the bazooka spending plans from Europe. Meanwhile, GBP/USD upside traction has stalled, with the pair perched near the $1.29 handle after last week’s massive 2.7% climb.

With US recession risks rising, the risk sensitive pound lost the most ground against the Japanese yen yesterday as heightened risk aversion drove demand for safe-haven currencies. Although the UK looks better positioned to avert tariffs from the US due to its goods trade deficit, the pound is likely to remain vulnerable via the risk sentiment channel due to its worsening net international investment position and the fact it has a persistent current account deficit. This means sterling is reliant on foreign capital inflows, which often dry up when the market mood turns sour.

Meanwhile, on the macro front, data early this morning showed retail sales in the UK rose by 0.9% y/y in February, a sharp slowdown from January’s 2.5% gain and well below the expected 2.4% increase. Consumers continued to cut back on purchases amid the ongoing cost-of-living crisis. UK GDP figures later this week will be in spotlight for pound traders.

Equities, oil and yields tumbling

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

All times are in GMT

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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Mar 11, 2025 By PARKERYL Currency

Aussie lower as Nasdaq hits correction territory – United States

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

Tech stocks crumble on US slowdown fears

Global markets continued to lose ground overnight led by the ongoing fall in US technology stocks.

The tech-focused Nasdaq index lost a massive 4.0% overnight with the benchmark now down 13.1% from last month’s highs. A fall of more than 10% from recent highs is a widely-used definition of a correction.

The US’s Dow Jones fell 2.1% overnight while the S&P 500 lost 2.7%.

In FX markets, most risk-sensitive currencies like the Aussie, kiwi and GBP fell.

The AUD/USD lost 0.5% with the market continuing to trade within the range between 0.6200 and 0.6400.

The NZD/USD lost 0.3% but the kiwi’s relative outperformance versus the Aussie saw the NZD/AUD climb towards the year’s highs.

The Singapore dollar and Chinese yuan were also weaker. The USD/SGD gained 0.2% while USD/CNH climbed 0.3%.

UK retail resilience fading as GBP rally nears ceiling

The euro and British pound remain the stronger performers in FX markets however both the GBP/USD and EUR/USD have produced short-term reversals near the four-month highs overnight.

Early today, the UK BRC sales monitor will be revealed. According to official figures, sales grew by a strong 2.5% year-over-year on the BRC like-for-like measure in January, with a respectable volume increase.

Accordingly, the last two BRC measurements have been much higher than the average for 2010–19 of 0.4% year over year.

Malaysia’s stable jobs may boost ringgit

Today, Malaysia’s unemployment rate will be revealed.

In January, we anticipate that the seasonally adjusted unemployment rate will be steady at 3.2%, supported by ongoing resilience, especially in the services sector.

The ringgit’s superior performance in Asia is supported by Malaysia’s better trade balance and perhaps larger tourist surplus.

USD/MYR faces key resistance levels of 50-day 4.4396 and 200-day 4.4719 next where MYR buyers may look to take advantage.

Euro extends outperformance

Table: seven-day rolling currency trends and trading ranges

Key global risk events

Calendar: 10 – 15 March

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.

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Mar 10, 2025 By PARKERYL Currency

Consolidation after a momentous week – United States

Written by the Market Insights Team

Bank of Canada on the spotlight

Kevin Ford –FX & Macro Strategist

Last Friday provided fresh insights into the state of the labor markets in both the U.S. and Canada as of the end of February.

In the U.S., while the jobs report was close to expectations (151K jobs created versus the 160K forecast), the market was positioned on the softer side. A few cracks in the labor market added to the U.S. growth scare, prompting another day of sell-off in American stocks, which have significantly underperformed European and global equities year to date. Unemployment inched up to 4.1% from 4% in the previous month, and January’s payroll data was revised downward. Also notably, federal government employment declined by 10K in February. As highlighted in the previous Daily Market Update, there has been speculation that payroll data might eventually reflect the impact of DOGE’s federal employee layoffs. These effects are more likely to appear in the March payroll figures, due next month.

In Canada, the labor market report was notably weaker than expected. Employment increased by just 1.1K jobs in February, significantly below the anticipated 20K gain. This underperformance came as a surprise, given the strong momentum seen in previous months when 211K positions were added between November and January. On a positive note, unemployment edged down to 6.6% from 6.7% in the prior month, offering a modest silver lining amid the disappointing data.

For both the U.S. and Canada, next month’s job reports will likely shed light on the markets’ responses to tariff threats, ongoing uncertainty, and their implementation throughout February and March.

Now, after the disappointing job report in Canada, the aggregate data released in February along with tariffs uncertainty, the probability of a 25-bps cut by the Bank of Canada this coming Wednesday has increased to 87%. Also, this Wednesday the market will be expecting US February CPI data, where the core rate is expected to remain sticky at 0.3% MoM.

FX markets might see some consolidation, after a very volatile week focused on EUR and GBP upside movements and US dollar softness.

No Trump put to hope for?

Boris Kovacevic – Global Macro Strategist

The US dollar experienced its largest weekly decline since 2022, driven by a combination of tariff uncertainty, weaker economic data, and rising optimism in European markets following Germany’s historic debt announcement.

On Friday, the US labor market showed signs of softening, with nonfarm payrolls increasing by 151k, falling short of the 160k consensus estimate. While the deviation was not drastic, it added to broader concerns of an economic slowdown. At the same time, President Trump’s decision to postpone tariffs on Canada and Mexico failed to reassure investors, as markets continue to prioritize stability over short-term adjustments.

Investor sentiment toward the US economy has also been tempered by growing recognition that Trump’s second term may not deliver the economic boom some had anticipated. Both the President and Treasury Secretary Bessent emphasized the need for structural reforms, acknowledging that markets and the economy could face turbulence as the administration undertakes an overhaul of government policies. Government spending and employment have become bloated, according to Bessent, and a drawdown in both is needed. Investors will need to come to terms with the fact that there might be no “Trump put” in the end.

US equities ended the week lower, reflecting these concerns, though Federal Reserve Chair Jerome Powell provided a temporary boost on Friday. Powell reassured markets that the economy remains on solid footing and that he is not overly concerned about current conditions. However, his remarks failed to stem the dollar’s continued decline, which extended into the weekend.

While the dollar’s fall is primarily market-driven, history suggests that Trump’s favorability ratings tend to follow a similar trajectory. A strong dollar has often coincided with confidence in his economic policies, while periods of weakness—such as now—signal increasing investor skepticism. This isn’t to say that the dollar dictates poll numbers, but both serve as indicators of market and public sentiment. If the greenback’s slump reflects eroding trust in Trump’s economic agenda, could his approval ratings be next in line for a drop? With trade tensions rising and investors reassessing his second-term outlook, it’s a risk worth watching.

Looking ahead, investors will closely monitor economic data and policy developments, as uncertainty around trade, fiscal reforms, and monetary policy continues to shape market dynamics. The US inflation release will be a key event to watch this week.

Betting on Europe again

Boris Kovacevic – Global Macro Strategist

The euro strengthened last week, benefiting from broad dollar weakness, a shift in investor sentiment, and renewed fiscal optimism in Europe. Germany’s historic debt issuance announcement fueled expectations of stronger growth, while the European Central Bank’s quarter-point rate cut on Thursday was offset by a more cautious policy outlook.

On Saturday, ECB Executive Board member Isabel Schnabel warned that inflation in the Eurozone is more likely to remain above the 2% target for an extended period than to decline sustainably below it. Her remarks suggest growing resistance within the ECB to further rate cuts in the near term. Schnabel’s comments come as policymakers prepare for a pivotal April decision, with divisions emerging over how much further monetary easing is warranted. Meanwhile, Europe’s economic outlook continues to evolve as governments prepare to deploy hundreds of billions of euros in defense and infrastructure spending, particularly in Germany.

The euro saw strong gains last week, rallying 4.4% against the dollar. It was the largest advance since 2009, the year the German debt break had been introduced. However, the currency faced some resistance near $1.0850, as traders reassessed the implications of a hawkish ECB amid an improving economic outlook. Looking ahead, market participants will closely monitor Eurozone inflation data and ECB communications for further clues on monetary policy. With the bloc’s cyclical recovery gaining momentum and inflation risks still elevated, expectations of additional ECB easing are becoming increasingly uncertain.

Pound’s mixed fortunes

George Vessey – Lead FX & Macro Strategist

The pound has been caught in the crossfire of late, weakening against the euro, but strengthening against the US dollar. On the latter, due to US growth scares, more Fed easing being priced in has boosted UK-US rate differentials in the pound’s favour. GBP/USD surged 2.7% last week and above key moving average resistance levels, opening the door to a test of the $1.30 handle in the near-term. The daily chart is flashing overbought though, which suggests a correction lower, or period of consolidation is looming, but from a valuation perspective, GBP/USD is still 4% below its 10-year average of $1.35.

Against the euro though, given the huge spending plans from Europe, the pound suffered its worst week in two years, falling 1.6% before fading around its 50-week moving average, which has supported for over a year now. However, if GBP/EUR struggles to reclaim its 200-day moving average at €1.1929, then more downside could be in the offing, especially as the fiscal divergence between the UK and Eurozone could prove more euro positive due to growth differentials. However, a consolidation in the UK’s fiscal outlook should limit the downside risk in sterling, whilst near-term monetary policies and sterling’s carry advantage due to higher UK yields remains pound positive.

In the spotlight from the UK this week, we have monthly GDP data. The UK economy has been on a fragile footing since the second half of 2024, and January’s GDP should confirm a slowing in momentum from 0.4% m/m to 0.1%. However, the three-month average is expected to pick up from 0.0% to 0.2%. Unless we see any major deviation from the consensus, the data is unlikely to move the needle on Bank of England policy expectations.

EUR/USD up 3.3% in last seven days

Table: 7-day currency trends and trading ranges

Key global risk events

Calendar: March 10-14

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.

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