What to trade this week

Havens favoured as trade risks simmer

This week’s report dives into what looks set to influence the fair value of the major currencies – think 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 coming seven days. We’re setting this against the backdrop of the wider seven-week picture and, of course, how they’ve performed recently. We’ll be looking at the usual suspects: what markets expect from central bank policy, the latest economic numbers, and the big elephant in the room – the current geopolitical situation.

Right now, the single biggest force shaping the currency landscape appears to be the ongoing uncertainty surrounding global trade policies, particularly those originating from the US, and how markets are reacting to that. This factor is hugely important; it significantly affects overall risk appetite, feeds into commodity price swings, and definitely impacts how central banks view the future. The currencies that tend to be most sensitive to this seem to be the traditional safe-havens (like the JPY and CHF), the US Dollar itself (given it’s where the policy shifts are coming from), and those currencies tied closely to commodities and thus exposed to shifts in global growth and trade flows (that includes the AUD, NZD, and CAD).

Here’s a snapshot of how we see things potentially influencing each currency’s fair value over the next week:

• CHF (Swiss Franc): Looking Moderately Bullish. That persistent global uncertainty is really boosting its appeal as a safe place to park money, helped along by Switzerland’s famously low inflation.

• JPY (Japanese Yen): Moderately Bullish too. The same safe-haven draw from trade worries, plus the Bank of Japan’s move towards slowly, cautiously normalising policy, seems to make its yield profile relatively more attractive.

• GBP (British Pound): Somewhere between Neutral and Moderately Bearish. The picture here is pretty finely balanced between changing market bets on when the Bank of England might start cutting rates and that wider global risk sentiment tied back to US trade policy.

• EUR (Euro): Appears Moderately Bearish. Concerns about Eurozone growth, amplified by the potential hit from US trade policy, seem to be clashing a bit with the European Central Bank still being on an easing path.

• NZD (New Zealand Dollar): Leaning Moderately Bearish. Markets are clearly pricing in more easing from the RBNZ because of domestic growth worries, and the Kiwi’s pretty sensitive to how global risk unfolds.

• AUD (Australian Dollar): Also Moderately Bearish. The ongoing murkiness around US-China trade looks like it’s threatening commodity demand, and expectations for RBA rate cuts are quite firm.

• CAD (Canadian Dollar): Seems Moderately Bearish. A few big question marks are hanging over it: trade talks with the US remain uncertain (even after a recent tariff pause), oil prices are volatile, and the Bank of Canada sounds pretty cautious.

• USD (US Dollar): Looks Moderately Bearish. The sheer uncertainty from trade policy and growing concerns about “stagflation” – slower growth potentially mixed with tariff-driven price hikes – are a challenge for the dollar, maybe even offsetting some of its haven appeal right now.

Swiss Franc: A bit of a beacon

The Swiss Franc is probably going to see a moderately bullish push influencing its fair value in the days and weeks ahead.

For this upcoming week specifically, the Franc’s strength is likely going to come down to that ongoing global uncertainty, both political and economic – especially what happens with US trade policy. It just keeps pushing people towards safe havens. Pair that with Switzerland’s inflation remaining incredibly low, and you’ve got a currency that looks pretty appealing. This pretty much lines up with the broader view for the next seven weeks; those same things – its safe-haven role in turbulent times and strong domestic basics like stable prices – are expected to keep giving the CHF underlying support.

Looking back at the previous seven days, the Franc definitely felt a very bullish influence, really driven home by rising global trade tensions sparked by those US tariff actions. That sent investors scrambling for safety, giving the CHF a big lift against other currencies. That story lines up nicely with the past seven weeks too, where that rush into quality was the main theme. It consistently pushed the currency higher, seemed to drag domestic bond yields lower, and perhaps even contributed to those record gold prices as people tried to duck the trade-related choppiness.

Japanese Yen: Safe haven meets policy nuance

Expect to see a moderately bullish influence on the Japanese Yen’s fair value in the upcoming days and weeks.

The Yen’s path over the next week seems set to be shaped by two main things: its well-known role as a safe haven (particularly with all the lingering uncertainty around US trade policy, including talks with Japan) and the underlying, slow shift towards monetary policy normalisation from the Bank of Japan, which might be making its yield profile look slightly better relative to some peers. This moderately bullish view pretty much fits with the next seven weeks too – those drivers, ongoing haven demand linked to trade risks and the monetary policy outlook comparisons, look likely to remain key supports for the Yen.

Thinking back to the week before, the Yen experienced a really strong bullish influence, practically dictated by the extreme volatility and uncertainty caused by US trade policy moves. When the US changed its tariff approach, it often triggered significant inflows into safe assets during stressful periods, causing sharp bounces in the Yen. This strong reaction is pretty much what we saw over the entire prior seven weeks, where the safe-haven impulse was the dominant factor, giving the Yen substantial strength during turbulent episodes stirred up by US trade policy shifts.

British Pound: A tricky balancing act

For the British Pound, the outlook seems to be leaning somewhere between neutral and moderately bearish for the next few days and weeks.

Over the coming week, Sterling’s direction is probably going to depend on the tightrope walk between changing market bets on the Bank of England’s rate cut timing (driven by new data and comments from BoE officials) and that overarching global risk sentiment shaped by US trade developments. While recent UK data has shown a bit of resilience, the possibility of negative impacts spilling over from trade spats definitely creates some headwinds, tilting the immediate pressure slightly downwards. This picture looks pretty consistent with the seven-week view, where the path the BoE takes versus those external risks remains the central theme. It suggests pressure will likely stay somewhere in that neutral to slightly bearish range unless we see some unexpectedly positive developments.

In the week that just passed, Sterling’s performance was heavily influenced by a broader US dollar weakness that often stemmed from US trade policy uncertainty. This tended to outweigh domestic factors like falling inflation and rising expectations for BoE rate cuts. As a result, the GBP saw a moderately bullish influence, largely because the USD was having a rough time. This is slightly different from the wider seven-week view, which also acknowledged external factors (USD weakness being key) driving GBP strength then, but highlighted that domestic easing bets were also really solidifying. It just shows how much the dollar’s particular struggles seemed to dominate the picture during that time.

Euro: Growth worries still loom

The Euro appears to be under a moderately bearish influence over the upcoming days and weeks.

For the week ahead, the Euro’s direction will likely be shaped by lingering worries about how US trade policy might impact growth across the Eurozone. Added to that is the European Central Bank sticking to its data-dependent easing path. While Germany’s planned fiscal stimulus offers a potential cushion, the immediate threat of tariffs and concerns about a global slowdown are expected to weigh on confidence, likely putting some moderate bearish pressure on the currency. This pretty much aligns with the seven-week picture, where those exact same things – trade risks hitting growth versus the ECB’s easing relative to other central banks – look set to define a tricky environment for the single currency.

Over the past seven days, the Euro saw a moderately bullish lift, driven by a somewhat complex mix of forces. Sure, rising trade risks are fundamentally bad news for Eurozone growth, but significant US dollar weakness (again, linked to US policy uncertainty) provided substantial support for the EUR/USD pair. This recent experience fits into the seven-week story, which definitely includes the negative impacts of trade tensions and the ECB’s moves but also acknowledges that when the US dollar is really weak, it can often dominate and lead to periods where the Euro gains against the dollar, even with underlying headwinds in the Eurozone.

New Zealand Dollar: Facing those easing headwinds

Expect the New Zealand Dollar to feel a moderately bearish pull on its fair value over the next little while.

The Kiwi looks set to face headwinds in the coming week, largely driven by markets still expecting more monetary easing from the Reserve Bank of New Zealand (RBNZ) because of domestic growth concerns. Put that together with the currency’s tendency to be pretty sensitive to global risk sentiment (you know, that sentiment currently being swayed by US trade policy uncertainty), and you’d expect to see some downward pressure. This moderately bearish outlook for the near term fits neatly with the seven-week picture, where those same key drivers – expectations for RBNZ easing and global risk linked to trade – are likely to keep pressure on the currency.

Thinking back to the previous week, the NZD bounced around quite a bit but ended up seeing an overall moderately bearish influence. This seemed to stem from two things: the RBNZ actually cutting rates in April (confirming their dovish path) and some really wild swings in global risk sentiment, which came down to rapid changes in US tariff policies. This echoes the main factors we’ve seen over the last seven weeks, where RBNZ rate cuts and the highly volatile risk environment because of US trade actions were the big players. They caused plenty of volatility but overall put the currency under net moderately bearish pressure.

Australian Dollar: Riding those commodity crosscurrents

The Australian Dollar seems likely to face some downward pressure this week.

The primary reason appears to be the lingering uncertainty surrounding US-China trade relations. That uncertainty casts a shadow over global growth and, crucially for Australia, threatens demand for key commodities. On top of that, markets look pretty confident about the Reserve Bank of Australia (RBA) cutting rates soon. That’s being driven by domestic inflation easing and those significant external risks we mentioned. So, this moderately bearish view for the next week lines up well with the seven-week perspective, where those same big factors – external trade problems and the signal of dovish RBA policy – are expected to continue weighing on the currency.

Over the past week, the AUD’s value seemed most affected by the escalating US-China trade conflict and the resulting global risk aversion. Couple that with the RBA clearly pivoting towards an easing stance in its communications. These things really overshadowed any domestic data points and led to noticeable currency weakness and volatility, ultimately leaving a moderately bearish overall influence. That fits directly with the main drivers over the previous seven weeks, where trade disputes and the RBA’s policy shift were paramount, causing weakness despite maybe seeing some pockets of resilience domestically.

Canadian Dollar: Under the shadow of trade talks

The Canadian Dollar is anticipated to have a tough week.

Several key things are driving this outlook: the considerable uncertainty around US-Canada trade (even with that temporary tariff pause), the ups and downs of global oil prices driven by geopolitics, and the Bank of Canada generally sounding more cautious on policy compared to the US Federal Reserve, all while domestic economic data looks a bit softer. It really looks like the significant risks linked to potential trade problems could outweigh any possible support. This moderately bearish view for the near term seems to mirror the seven-week outlook, which highlights that same mix of trade worries, oil price factors, BoC caution, and softening domestic indicators creating a generally challenging situation.

Over the week before, the CAD got hit by a combination of really volatile US trade policy actions, big swings in oil prices, the Bank of Canada pressing pause on policy precisely because of trade uncertainty, and some notable domestic data surprises (like job losses and a drop in inflation). This mix led to considerable volatility but, all in all, exerted a moderately bearish pull. That picture fits well with the key factors over the past seven weeks – US trade policy swings, oil volatility, the BoC’s policy pause pivot, and impactful domestic data surprises – all creating volatility and contributing to that moderately bearish trend.

US Dollar: Those tariff and growth headwinds

The US Dollar looks set for potential weakness this coming week.

The main drivers here seem to be the deep uncertainty stemming from US trade policy, the increasing possibility of stagflation (where growth slows down while potentially facing tariff-fuelled inflation), and the tricky spot the Federal Reserve finds itself in trying to manage all these risks. The unpredictable nature of trade actions and the potential damage they could do to the economy appear likely to push the dollar down. This moderately bearish short-term view pretty much lines up with the seven-week picture, where those very same factors – trade policy unpredictability, stagflation concerns, and the Fed’s policy challenges – are anticipated to chip away at confidence and perhaps outweigh any temporary flight-to-safety moments.

Looking back at the previous week, the key forces affecting the USD were, quite simply, the administration’s aggressive and volatile trade policies and how markets reacted to them. Putting tariffs in place, escalating them, then partly pausing – it all created extreme uncertainty and risk aversion. That led to some dramatic swings and honestly, made people question the dollar’s usual role as a safe haven. The overall effect was a net moderately bearish influence. This almost exactly mirrors the experience of the prior seven weeks, where those volatile trade policies were dominant. They caused market turmoil, challenged the dollar’s haven status, and, despite occasional rushes into safety, resulted in a net moderately bearish impact.

In conclusion

This week, the foreign exchange market looks likely to stay incredibly sensitive to the unpredictable world of global trade policies, particularly anything coming out of the US. This central theme is expected to really dictate risk appetite, pushing money towards traditional safe havens like the JPY and CHF, while perhaps putting pressure on the USD itself, as well as commodity-linked currencies like the AUD, NZD, and CAD.

Central bank expectations are playing a big role too. You have the RBNZ and RBA appearing set on easing, contrasting with the Bank of Japan’s more cautious path towards normalising policy, and the difficult juggling acts facing the Fed, ECB, and Bank of England. Traders will probably need to keep a close eye out for sudden shifts in rhetoric on trade and monitor incoming economic data – especially figures on inflation and economic activity – for hints on how central banks might react.

A Few Key Economic Indicators to Watch:

• Apr 23: Euro Area PMIs (Composite, Manufacturing, Services Flash for April): These are pretty critical, giving us an early pulse check on the health of the Eurozone’s main sectors in April. People will be watching closely for any signs things are stabilising or perhaps worsening, especially given all the trade war concerns. This data will strongly influence expectations around the ECB and general sentiment towards the Euro.

• Apr 23: UK PMIs (S&P Global Manufacturing/Services Flash for April): Similar to the Eurozone numbers, these provide the very first look at how busy the UK economy was in April. Since the Bank of England pays a lot of attention to data and how growth balances against inflation, these figures could really impact what people expect for rate cuts and which way the Pound might move.

• Apr 23: Japan/Australia PMIs (S&P Global/Jibun Bank Manufacturing/Services Flash for April): While already mentioned under their specific currencies, these PMIs for Japan and Australia offer vital, up-to-date data on activity in economies quite sensitive to global trade and commodity cycles. They’ll be important drivers for the JPY and AUD respectively.

• Apr 24: US Durable Goods Orders (Mar): This number is basically a measure of demand for manufactured goods that are meant to last a while. It gives good insight into what businesses might be investing and how production could look down the line. A surprisingly strong or weak report could definitely affect US growth expectations, what the Fed might do with policy, and overall sentiment around the US dollar.

• Apr 25: UK Retail Sales (Mar): This tells us how strong consumer spending was in the UK. After some mixed signals recently, this release will be watched carefully to see if that resilience continues or if there are signs of weakness creeping in. That, in turn, could influence what markets expect from the Bank of England and how the Pound performs.