Navigating the Crosscurrents:
Welcome to this week's analysis of the major currency markets. This report delves into the anticipated drivers influencing the fair value of the New Zealand Dollar (NZD), Australian Dollar (AUD), Japanese Yen (JPY), Swiss Franc (CHF), Euro (EUR), British Pound (GBP), Canadian Dollar (CAD), and US Dollar (USD) over the upcoming seven days, placing these expectations within the context of the broader seven-week outlook and recent performance. We will examine the interplay of monetary policy expectations, economic data releases, and the prevailing geopolitical climate to provide a comprehensive overview for navigating the foreign exchange landscape.
The most influential driver across the currency spectrum this week is expected to be the persistent uncertainty surrounding global trade policies, particularly those emanating from the US, and the market's reaction to this uncertainty. This factor significantly impacts risk sentiment, commodity prices, and central bank outlooks. Currencies most sensitive to this driver include the safe-havens (JPY, CHF), the US Dollar itself as the source of the policy shifts, and commodity-linked currencies highly exposed to global growth and trade flows (AUD, NZD, CAD).
Strength of Currencies
Here is a summary of the expected influence on each currency's fair value for the week ahead:
CHF: Moderately Bullish – Persistent global uncertainty fuels safe-haven demand, supported by extremely low domestic inflation.
JPY: Moderately Bullish – Safe-haven appeal driven by trade policy uncertainty combines with the BoJ's cautious normalization stance.
GBP: Neutral to Moderately Bearish – Evolving BoE easing expectations are balanced against global risk sentiment influenced by US trade policy.
EUR: Moderately Bearish – Eurozone growth concerns heightened by US trade policy impact clash with the ECB's ongoing easing path.
NZD: Moderately Bearish – Market anticipation of further RBNZ easing due to domestic growth concerns weighs alongside sensitivity to global risk.
AUD: Moderately Bearish – Uncertainty around US-China trade relations threatens commodity demand, coupled with expectations of RBA rate cuts.
CAD: Moderately Bearish – Significant uncertainties in US-Canada trade talks, oil price volatility, and a cautious BoC stance dominate.
USD: Moderately Bearish – Profound trade policy uncertainty and rising stagflation risks challenge the dollar, potentially outweighing haven flows.
Swiss Franc: Beacon in the Storm
The CHF is expected to see a moderately bullish influence upon its fair value throughout the upcoming days and weeks.
Over the next seven days, the Swiss Franc's strength is likely to be driven primarily by persistent global geopolitical and economic uncertainty, especially stemming from US trade policy, which continues to fuel safe-haven demand. This external factor, combined with Switzerland's remarkably low inflation environment, reinforces the Franc's appeal. This dynamic is consistent with the seven-week outlook, where these same drivers – safe-haven status amidst global turmoil and strong domestic fundamentals like price stability – are expected to provide ongoing underlying support for the currency.
In the previous seven days, the Franc experienced a very bullish influence, overwhelmingly driven by escalating global trade tensions initiated by US tariff actions and the resulting flight to safety by investors. This dynamic significantly boosted the CHF against major counterparts. This aligns closely with the narrative over the previous seven weeks, where this flight-to-quality dynamic was the dominant theme, propelling the currency higher, depressing domestic bond yields, and contributing to record gold prices as investors sought refuge from trade-related volatility.
Economic Indicators
No major Swiss economic indicators are listed in the provided forecast for the upcoming seven-day period (April 19 - April 25, 2025). The market will primarily react to global risk sentiment and developments elsewhere.
Japanese Yen: Haven Demand Meets Policy Shift
The JPY is expected to see a moderately bullish influence upon its fair value throughout the upcoming days and weeks.
The Japanese Yen's trajectory in the upcoming week is anticipated to be shaped by two key forces: its traditional role as a safe-haven asset amidst ongoing US trade policy uncertainty (particularly US-Japan negotiations), and the underlying, albeit cautious, monetary policy normalization stance of the Bank of Japan creating a relatively attractive yield profile. This moderately bullish outlook aligns with the seven-week view, where these factors – persistent haven demand due to trade risks and the comparative monetary policy outlook – are expected to remain dominant drivers supporting the Yen.
During the prior seven days, the Yen saw a very bullish influence, almost entirely dictated by extreme volatility and uncertainty generated by US trade policy actions. Shifts in US tariff strategies triggered significant safe-haven inflows during periods of market stress, causing sharp appreciation. This intense reaction mirrors the experience of the previous seven weeks, where this safe-haven dynamic was the overwhelming factor, driving substantial Yen strength during turbulent episodes spurred by US trade policy shifts.
Economic Indicators
Key Japanese indicators due in the upcoming seven days (April 19 - April 25, 2025):
Apr 23: Jibun Bank Manufacturing PMI Flash (Apr) - Forecast: 47.8
Apr 23: Jibun Bank Services PMI Flash (Apr) - Forecast: 49.7
British Pound: Balancing Act
The GBP is expected to see a neutral to moderately bearish influence upon its fair value throughout the upcoming days and weeks.
Over the next seven days, Sterling's direction will likely hinge on the balance between evolving market expectations for the Bank of England's easing cycle, influenced by upcoming data and BoE speeches, and the prevailing global risk sentiment shaped by US trade developments. While recent UK data showed some resilience, the potential negative spillovers from trade disputes create headwinds, tilting the immediate pressure slightly negative. This outlook is broadly consistent with the seven-week view, where the BoE's path versus external risks remains the central theme, suggesting ongoing neutral to moderately bearish pressure unless significant positive catalysts emerge.
In the previous seven days, Sterling's value was primarily driven by broad US dollar weakness stemming from US trade policy uncertainty, which often overshadowed domestic factors like falling inflation and rising BoE rate cut expectations, resulting in a moderately bullish influence largely due to USD underperformance. This contrasts somewhat with the seven-week view, which also acknowledges the dominance of external factors (USD weakness) driving GBP strength during that period, but sets it against a backdrop where domestic easing expectations were solidifying, highlighting the overriding impact of the dollar's specific troubles during that timeframe.
Economic Indicators
Key UK indicators and events scheduled for the upcoming seven days (April 19 - April 25, 2025):
Apr 22: BoE Breeden Speech
Apr 23: S&P Global Manufacturing PMI Flash (Apr) - Forecast: 44.1
Apr 23: S&P Global Services PMI Flash (Apr) - Forecast: 51.0
Apr 23: BoE Bailey Speech
Apr 23: BoE Breeden Speech
Apr 24: CBI Business Optimism Index (Q2)
Apr 24: CBI Industrial Trends Orders (Apr) - Forecast: -36
Apr 25: Gfk Consumer Confidence (Apr) - Forecast: -21
Apr 25: Retail Sales MoM / YoY (Mar) - Forecast: -0.30% / 2.00%
Euro: Growth Concerns Persist
The EUR is expected to see a moderately bearish influence upon its fair value throughout the upcoming days an weeks.
The Euro's performance in the upcoming week is likely to be dictated by ongoing concerns about the impact of US trade policy on Eurozone growth, alongside the European Central Bank's data-dependent easing trajectory. While Germany's planned fiscal stimulus offers a potential buffer, immediate tariff threats and global slowdown worries are expected to weigh on sentiment, exerting moderately bearish pressure. This outlook mirrors the seven-week perspective, where these same factors – trade risks impacting growth versus the ECB's easing path relative to peers – are expected to define a challenging environment for the single currency.
Over the past seven days, the Euro experienced a moderately bullish influence, driven by a complex interplay. While escalating trade risks were fundamentally bearish for Eurozone growth, significant US dollar weakness, stemming from US policy uncertainty, provided substantial support for the EUR/USD pair. This recent experience aligns with the seven-week narrative, which highlights both the negative impact of trade tensions and the ECB's easing measures, but also acknowledges that pronounced US dollar weakness often dominates, leading to periods of Euro strength against the dollar despite underlying Eurozone headwinds.
Economic Indicators
Key Euro Area indicators due in the upcoming seven days (April 19 - April 25, 2025):
Apr 22: Government Budget to GDP 2024 - Forecast: -3.20%
Apr 22: Government Debt to GDP 2024 - Forecast: 88%
Apr 22: Consumer Confidence Flash (Apr) - Forecast: -15
Apr 23: HCOB Composite PMI Flash (Apr) - Forecast: 50.3
Apr 23: HCOB Manufacturing PMI Flash (Apr) - Forecast: 47.9
Apr 23: HCOB Services PMI Flash (Apr) - Forecast: 50.5
Apr 23: Balance of Trade (Feb) - Forecast: €15.1B
New Zealand Dollar: Facing Easing Headwinds
The NZD is expected to see a moderately bearish influence upon its fair value throughout the upcoming days and weeks.
The New Zealand Dollar faces headwinds in the coming week, primarily driven by persistent market expectations for further Reserve Bank of New Zealand monetary easing due to domestic growth concerns. This factor, combined with the Kiwi's sensitivity to global risk sentiment dictated by US trade policy uncertainty, is expected to exert downward pressure. This moderately bearish near-term outlook aligns perfectly with the seven-week perspective, which identifies the same key drivers – RBNZ easing expectations and global risk tied to trade policy – as likely to maintain pressure on the currency.
During the previous seven days, the NZD experienced sharp price swings but an overall moderately bearish influence. This resulted from the combination of the RBNZ's April rate cut confirming its dovish path and extreme volatility in global risk sentiment caused by rapid shifts in US tariff policies. This aligns with the drivers identified over the previous seven weeks, where RBNZ rate cuts and the highly volatile risk environment stemming from US trade actions were the dominant forces, creating significant volatility but exerting a net moderately bearish influence.
Economic Indicators
Key New Zealand indicators scheduled for the upcoming seven days (April 19 - April 25, 2025):
Apr 22: Balance of Trade (Mar) - Forecast: NZ$ 0.03B Surplus
Australian Dollar: Commodity Crosscurrents
The AUD is expected to see a moderately bearish influence upon its fair value throughout the upcoming days and weeks.
The Australian Dollar is likely to face downward pressure in the week ahead, primarily due to persistent uncertainty surrounding US-China trade relations, which threatens global growth and vital commodity demand for Australia. Firm market expectations of impending Reserve Bank of Australia rate cuts, driven by easing domestic inflation and significant external risks, add to the challenging environment. This moderately bearish outlook for the next seven days is consistent with the seven-week view, where these same dominant factors – external trade headwinds and a signalled dovish RBA policy shift – are expected to continue weighing on the currency.
Over the previous seven days, the AUD's value was most influenced by the escalating US-China trade conflict and consequent global risk aversion, coupled with the RBA's discernible pivot towards an easing bias revealed in its communications. These factors overshadowed domestic data, leading to significant currency weakness and volatility, resulting in a moderately bearish overall influence. This aligns directly with the key drivers identified over the prior seven weeks, where trade conflicts and the RBA's policy shift were paramount, causing weakness despite pockets of domestic resilience.
Economic Indicators
Key Australian indicators due in the upcoming seven days (April 19 - April 25, 2025):
Apr 23: S&P Global Manufacturing PMI Flash (Apr)
Apr 23: S&P Global Services PMI Flash (Apr)
Canadian Dollar: Trade Negotiation Shadow
The CAD is expected to see a moderately bearish influence upon its fair value throughout the upcoming days and weeks.
The Canadian Dollar is anticipated to face a challenging week, with key drivers including significant uncertainties surrounding the US-Canada trade relationship following a tariff pause, the path of global oil prices influenced by geopolitics, and the Bank of Canada's cautious monetary policy stance relative to the Fed, all against a backdrop of softer domestic data. The substantial risks tied to potential trade disruptions appear likely to outweigh potential support. This moderately bearish near-term view is mirrored in the seven-week outlook, which highlights the same confluence of trade uncertainties, oil price factors, BoC caution, and softening domestic indicators as creating an overall challenging environment.
During the prior seven days, the CAD's value was buffeted by extreme volatility in US trade policy actions, sharp fluctuations in oil prices, the BoC's policy pause due to trade uncertainty, and significant domestic data surprises (job losses, inflation drop). These combined drivers resulted in significant volatility but exerted an overall moderately bearish influence. This aligns with the drivers over the preceding seven weeks, where US trade policy volatility, oil price swings, the BoC's policy pivot to a pause, and impactful domestic data surprises were the key factors creating volatility and contributing to a moderately bearish trend.
Economic Indicators
Key Canadian indicators scheduled for the upcoming seven days (April 19 - April 25, 2025):
Apr 23: New Housing Price Index MoM / YoY (Mar) - Forecast: 0% / 0.30%
Apr 25: Retail Sales MoM / Ex Autos MoM (Feb - Final) - Forecast: -0.40% / -0.30%
Apr 25: Retail Sales MoM (Mar - Prelim) - Forecast: 0.10%
US Dollar: Tariff and Growth Headwinds
The USD is expected to see a moderately bearish influence upon its fair value throughout the upcoming days and weeks.
The US Dollar is poised for potential weakness in the coming week, driven primarily by the profound uncertainty stemming from US trade policy, the rising risk of stagflation (slowing growth alongside potential tariff-fuelled inflation), and the Federal Reserve's complex challenge balancing these risks. The unpredictable nature of trade actions and their potential negative economic impact are expected to exert downward pressure. This moderately bearish short-term outlook is consistent with the seven-week view, where these same factors – trade policy uncertainty, stagflation risk, and Fed policy challenges – are anticipated to undermine confidence and potentially outweigh temporary safe-haven flows.
Over the previous seven days, the primary drivers influencing the USD were unequivocally the administration's aggressive and volatile trade policies and the market's reaction. Tariff implementation, escalation, and partial pauses created extreme uncertainty and risk aversion, leading to dramatic swings and questioning the dollar's traditional safe-haven role, ultimately exerting a net moderately bearish influence. This directly mirrors the experience of the preceding seven weeks, where volatile trade policies dominated, causing market turmoil, challenging the dollar's haven status, and resulting in a net moderately bearish impact despite occasional flights to safety.
Economic Indicators
Key US indicators due in the upcoming seven days (April 19 - April 25, 2025):
Apr 24: Durable Goods Orders (Mar) - Forecast: +1.8%
Apr 24: Existing Home Sales (Mar) - Forecast: 4.12M
Conclusion
This week, the foreign exchange market remains highly sensitive to the unpredictable nature of global trade policies, particularly those initiated by the US. This central theme is expected to drive risk sentiment, influencing safe-haven flows towards the JPY and CHF, while potentially weighing on the USD itself and commodity-linked currencies like AUD, NZD, and CAD. Central bank policy expectations also play a crucial role, with anticipated easing from the RBNZ and RBA contrasting with the BoJ's cautious normalization and the complex balancing acts faced by the Fed, ECB, and BoE. Traders should remain vigilant for sudden shifts in trade rhetoric and monitor incoming economic data, especially inflation and activity indicators, for clues on central bank reaction functions.
Key Upcoming Economic Indicators
Apr 23: Euro Area HCOB Composite/Manufacturing/Services PMI Flash (Apr): These are crucial, timely indicators of economic health across the Eurozone's major sectors. They provide the first glimpse into April's performance and will be watched closely for signs of stabilization or deterioration, heavily influencing ECB expectations and Euro sentiment, especially given trade war concerns.
Apr 23: UK S&P Global Manufacturing/Services PMI Flash (Apr): Similar to the Eurozone PMIs, these offer the earliest look at UK economic activity in April. Given the BoE's data dependency and focus on growth vs. inflation, these figures could significantly impact rate cut expectations and GBP direction.
Apr 23: JPY/AUD S&P Global/Jibun Bank Manufacturing/Services PMI Flash (Apr): While listed under specific currencies, these PMIs for Japan and Australia provide vital timely data on activity in key economies sensitive to global trade and commodity cycles, influencing JPY and AUD respectively.
Apr 24: US Durable Goods Orders (Mar): This indicator measures demand for long-lasting manufactured goods, offering insight into business investment and future production. A strong or weak reading can impact US growth expectations, Fed policy outlook, and USD sentiment.
Apr 25: UK Retail Sales (Mar): Provides insight into consumer spending strength in the UK. Following recent mixed signals, this release will be watched for confirmation of resilience or signs of weakness, influencing BoE policy expectations and GBP.