Collinson FX: April 23: USD and Equities rebound – US expects China trade war to de-escate soon
by Collinson FX 23 Apr 10:29 AEST
23 April 2025
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Collinson FX: April 23: US Markets and Currency rebounds
US equity markets and the US Dollar rebounded sharply overnight. The US Treasury Secretary, Scott Bessent, commented on the tumultuous trade war between China and the USA and said he thought that this would de-escalate soon. The IMF is meeting in Washington this week and the global trade wars appear to be dominating the conversations. Inflation appears to have become yesterday’s news, although the US Fed was also a hot topic. Trump has decided to exert control over interest rates and the Federal Reserve. He confirmed his low opinion of the Fed Chairman Powell, titling him ‘Mr Too Late’ and threatened him with dismissal. The US Dollar recovered some lost ground, with the EUR falling back to 1.1430, while the GBP drifted to 1.3340.
Commodity currencies also suffered the rising reserve, with the NZD surrendering 0.6000, while the AUD fell back below 0.6400. All eyes remain focused on the Sino-US trade wars, with capital flows also being curtailed. Behind the scenes there is communications going on, so progress will be made, but this is as much about ‘face’ as reality and economics.
Collinson FX: April 22: Easter fails to calm
The Easter celebrations did little to calm markets, as US equity markets tumbled sharply, to open the shortened trading week. Markets were dominated by a new front opening, when Trump declared war on the Fed and the Chairman, Powell. He labelled the Fed Chair, ‘Mr Too Late’ and too slow, also threatening termination of his role as Chairman of the Federal Reserve, if he does not act to cut rates. This was enough to throw markets into further disarray, with equities tumbling and the Dollar under further pressure. The EUR surged above 1.1500, while the GBP broke above 1.3400, at one stage.
Australia, NZ and most European markets remained closed for the Easter festivities, but the currencies were impacted by the market moves. The AUD regained 0.6400, while the NZD looks to retake the ‘Big Figure’, of 0.6000. Gold surged to all-time record highs blowing through USD$3,400, while nerves continue to fray. The trade war between China and the US escalates further, with China warning their trading partners not to sign trade deals with the US, that may be detrimental to China. It looks like an action filled shorte
Collinson FX: April 21: Markets close early for Easter
Markets closed out yet another tumultuous week early, to celebrate Easter, and contemplate. Markets are suffering extreme volatility during this period of trade wars, launched by the US, aimed mainly at China. China has retaliated defiantly, and the US has responded. Which side will blink first?
Negotiations must be initiated soon, and a deal will be brokered. The US are bent on a whole new global trade set of rules, which is underlined by free trade, but punishes tariffs and other trade restrictions, with reciprocal tariffs. More than 100 Countries are lining up for deals with the US, including the latest Italy and Japan, with many more to follow. The other major trading block, the EU, has suspended any retaliation, for 90 days. The coming week will also be shortened by the Easter break and ANZAC Day, in NZ and Australia. The focus will be on trade wars. The US Dollar remain weak, with the EUR trading 1.1350, while the GBP holds 1.3250.
The softer reserve allowed commodity currencies to build on recent gains, with the AUD approaching 0.6400, while the NZD has skyrocketed above 0.5900. NZ inflation numbers experienced a sharp spike, up to 2.5% from 2.2%, a complete reversal of the recent trend lower. There are many inflationary pressures withing the NZ economy and this is a major concern for the RBNZ and the Government. Markets are reading this as a probable restriction on future and near-term rate cuts, boosting the KIWI. The markets in Australia and NZ will be abbreviated, due to Easter Monday and ANZAC Day celebrations, in the coming week.
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