Welcome to the latest edition of the IFX Market Update.
As confidence dwindles, all signs point to a big American sell off. Volatility remains and could be around for a while. Read on to find out why.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1496% |
| gbp eur | 1.1645% |
| gbp usd | 1.3387% |
Rates correct as at 8.05am on Tuesday 22 April but may have now changed
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
US bond sell-off deepens concerns over debt sustainability
Yields on US Treasuries are once again rising - the biggest weekly surge in more than 20 years. This follows an investor sell off and renewed tirades against the Federal Reserve from Trump. USA’s status as the world’s most important bond market is under increasing strain. Analysts warn this could have ripple effects on everything from interest rates to global capital flows.
Tariff tensions escalate with warnings of retaliation
Beijing has warned countries against trading with US and Trump doubled down on his intentions, posting fresh talking points on what he deems to be ‘non-tariff cheating’. The EU are also considering potential countermeasures. The latest developments risk reigniting trade tensions at a time when cooperation is needed most as the effects of tariffs begin to be felt around the world, according to preliminary South Korean trade data.
Europe faces triple slowdown and futures fall
Even with the tariff reprieve, investors are jittery, and European futures fell following the holiday. The eurozone in general is experiencing sluggish growth, cooling inflation, and signals of lower interest rates, even as trade tensions temporarily ease. The ECB is now more likely to cut rates in June after economic indicators revealed a sharper-than-expected slowdown, with Germany and France both underperforming.
Recap
What happened last week…
With a US recession looming, banks are bracing for the worst. The sell off in US treasuries has rattled global markets and this volatility doesn’t appear to be going anywhere. Buyers and sellers don’t appear to finding areas of agreement.
The mass unwinding of a leveraged hedge fund strategy known as the "basis trade” could be a major factor behind the recent turbulence. Read this article to find out more.
Looking forward
The big moments to track this week.
Look out for developments in trade talks and a lot of manufacturing and services data, providing a 'health check' on the major economies.
Wednesday - S&P Global Services PMI. GBP
Thursday - Existing Home Sales. USD
Friday - ANZAC Day. AUD
Here's what we're talking to our clients about
We're always in dialogue with our clients about what's best for them. Here's a sneak peek at some of the conversations we're having and how we're supporting.
- Managing rapid changes in the FX rate environment.
- Understanding how tariffs/trade talks will potentially affect businesses.
- Security in managing cross border transactions.
The contents of this article do not constitute financial advice and are provided for general information purposes only.
