The Morning Update

The USD's slump continues while oil prices remain steady. Equity markets are down, and US yields are mixed as China hits back on tariffs. The on-again, off-again tariffs have caused the USD index to tumble 3.5% this week to a three-year low. The loss of confidence has seen the USD since to decade lows against the CHF and three-year lows against the EUR. In a volatile week, the US equity markets have seen foreign investors sell US$6.5 billion in US assets equities. Global equity markets continue under fresh selling pressure as investor confidence wanes as the US-China trade war escalates. China increases tariffs on US goods to 125% from 84%, and the EU Economy Commissioner Dombrovskis said the EU bloc was ready to defend its economic interests if no agreement could be reached with the US on tariffs. “I’m deeply concerned about the lack of confidence among investors in the US now,” said Nomura strategist Matsuzawa. “It’s a no-confidence vote from the equity market and Treasury market participants in the Trump administration and its policies.” Elsewhere, oil prices are on track for a second consecutive week of losses; Bitcoin strengthens 2.5% to $81.5K and gold rallies to a new record high of $3,236.5.The focus will remain on updates to US tariffs, the US PPI, the Michigan Consumer Sentiment Index, and the remarks from Feds Williams & Musalem to provide intraday guidance to currency markets.

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In other news. China increases additional tariffs on US imports to 125%. The EU could tax Big Tech if Trump trade talk fail, say von der Leyen. Switzerland seeks closer EU ties in response to Trump shock. Dollar and Treasuries sell off as Trump's China tariffs spook investors. EU agrees to start trade talks with UAE after Trump tariff war. The UK economy surpasses expectations to grow 0.5% in February. British Columbia to axe US contracts, pushing back in trade spat. Canada's Carney pledges crackdown on guns and drugs flowing from US. Prada braves tariff uncertainty to clinch $1.4 billion deal for Versace. Japanese household inflation expectations rise, keeping BoJ rate hike view alive.

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In currency markets. The USD continues to be pummelled as trade war rage, seeing the USD index tumbling 8.3% year-to-date in 2025. Safe-have JPY & CHF, alongside the EUR have all rallied over 10% in 2025. CNY is up 0.1%, while Asian currencies rallies by 0.9% on average against the USD. Trading currencies extend gains, with AUD up 0.1%, CHF and MXN firmed 0.7%, JPY gained 1%, SEK, ZAR, DKK, and NZD strengthened 1.2%, and NOK rallied 1.6% against the USD.

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CAD rallied to its strongest level against the USD in over five months as investors continued to exit the USD amid rising fears of a US recession, pushing the greenback into clear correction territory. The impact of US tariffs has led investors to forecast up to four interest rate cuts by theFederal Reserve. In comparison, the Bank of Canada is anticipated to make two additional rate cuts. The loonie has appreciated by 3.2% in April, strengthening 2.2% this week alone, despite oil prices declining 10.7% in April and down 15.8% in 2025. In focus today, alongside US economic releases, markets will monitor PM Carney’s meeting with top cabinet members to discuss the economic threat posed by US tariffs.

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EURCAD appreciates to a new five-year high as Canada is increasingly seen as more vulnerable to US tariffs.

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EUR rallies to fresh multi-year highs as the USD tumbles.The euro continues to be the currency of choice for investors exiting the USD, as the greenback remains under heavy selling pressure amid the escalating trade war between the US and China. The EU is looking to apply pressure on the US for a resolution, with EU Economy Commissioner Dombrovskis stating that the bloc is ready to defend its economic interests if no agreement is reached with the US on tariffs. The EU Commission has also suggested that a tax on Big Tech is on the table. Intraday, the US PPI & the Michigan Consumer Sentiment Index will be the primary drivers for markets today.

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GBPEUR tumbled to a sixteen-month low,. Despite better-than-expected UK growth, investor's continue to favour the euro as the EU is anticipated to weather the US tariffs better than the UK.

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GBP extends gains but stalls ahead of 1.3100 and key US data. The pound continues to strengthen against the weakening USD, gaining 4%in April to date. The USD index has entered correction territory due to the deepening China-US trade conflict, which raises fears of increasing US inflation and recession. Domestically, UK GDP beat expectations, rising 0.5% m/m in February, while industrial production jumped 1.5% m/m, and manufacturing production rallied 2.2% compared to the 0.2% expected for February. The better-than-expected data releases are helping to support the pound against the USD. Intraday, the US data releases will be monitored closely to provide direction.

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