Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Trump administration eyes long-haul approach on China trade
The greenback strengthened by 1% overnight but still below 100 key psychological barrier.
The CNH remained about 0.35% stronger at 7.2860, while high-beta currencies tracked higher US equities.
Treasury Secretary Bessent indicated rebalancing US-China trade could take two to three years, examining multiple factors including non-tariff barriers, government subsidies, and tariffs.
Key developments include possible auto parts exemptions from China tariffs according to the FT, and speculation about potential lower tariff rates of 50%-65% or a tiered approach.
We do expect higher FX volatility in the coming weeks.
The AUD/USD still below 0.6400 with a 0.1% loss overnight.
The NZD/USD, down 0.4%, still hovering below key psychological barrier of 0.6000.
WSJ says White House looking at slashing China tariffs
The Wall Street Journal reports that the White House is looking at ways to de-escalate trade tensions with China.
It said some tariffs could be cut in half on the plans being considered.
One official told the Journal that tariffs could be cut back to between 50% and 65%.
It said there is also some consideration of tiered tariffs: for example only 35% on goods that the US does not consider a threat to national security, but 100% on those goods that it does.
Nevertheless, USD/CNH has trailed its key 50-day EMA at 7.2881 recently, where the next key resistance lies at 7.3000 and 7.5000 next.
ECB/Bundesbank’s Nagel worries about recession and stagflation
Bundesbank President Nagel said he couldn’t rule out Germany dropping into recession this year.
Speaking on Bloomberg TV, he said the world economy was in a very delicate position.
He said although he didn’t think Germany’s fiscal package would be inflationary, he was still concerned that overall the Eurozone could see what amounts to a stagflationary environment this year.
Nagel was marginally dovish, but not overtly.
He said the ECB should be considered to be on autopilot and that it would continue to assess policy meeting-by-meeting.
EUR/USD has corrected from recent daily highs.
For EUR/SGD, next key support lies on 21-day EMA of 1.4801, and 50-day EMA of 1.4585 next, where EUR buyers may look to take advantage.
Aussie pairs scale back from highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 21 – 25 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.
