US dollar rocked by Trump’s latest tariff U-turn

Pound (GBP) slumps amid jump in UK borrowing costs

The pound (GBP) tumbled through yesterday’s trading session amid fresh concern over the UK bond market.

Yields on 30-year government debt climbed to their highest levels since 1998, surpassing the peak seen during the UK’s bond crisis at the start of the year and making it even more challenging for the government to grow the economy while sticking to its fiscal rules.

UK economic data remains in short supply today, which could see Sterling extend its slump if UK government borrowing costs continue to rise.

Euro (EUR) rallies as Germany’s CDU and SPD reach coalition agreement

The euro (EUR) strengthened on Wednesday as it was bolstered by its negative correlation with the US dollar (USD) and German political optimism.

The latter followed the news that the centre-right Christian Democratic Union (CDU) and centre-left Social Democratic Party (SPD) reached an agreement to form a new coalition government to confront the challenges facing the Eurozone’s largest economy.

So long as investors continue to favour safe-haven assets and USD demand continues to wane, it’s likely the euro will be able to maintain its positive trajectory.

US dollar (USD) slides amid US-China trade spat

The US dollar initially came under fresh selling pressure yesterday, as USD investors were rattled by new tit-for-tat tariffs between the US and China.

However, USD exchange rates then rallied sharply later in the evening after US President Donald Trump announced an immediate 90-day pause on his tariff plans for every country apart from China.

Coming up, the latest US consumer price index may infuse fresh volatility into USD exchange rates today. If inflation cools as forecast, it may tip the odds in favour of a Federal Reserve interest rate cut next month. While this would traditionally weaken the ‘greenback’, the prospect of looser monetary policy may help to temper recession bets and ultimately lift the US dollar.

Canadian dollar (CAD) firms despite plummeting oil prices

There appeared to be a decoupling of the Canadian dollar (CAD) and oil prices on Wednesday as CAD exchange rates rose, despite crude prices slumping to a new four-year low.

It remains to be seen if this decoupling persists today or if a tentative rebound in oil prices following Trump’s tariff pause could bolster the ‘loonie’.

Australian dollar (AUD) gains tempered by China deflation concerns

The Australian dollar (AUD) strengthened overnight on Wednesday as it got caught up in the wider market rally following Trump’s tariff pause. Tempering these gains, however, was data showing that China battled another month of deflation in March.

New Zealand dollar (NZD) bolstered by risk-on flows

The New Zealand dollar (NZD) also rallied in overnight trade amid the positive shift in risk appetite following Trump’s tariff reprieve.

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