April 11, 2025

“The historic volatility continues this morning. The euro is trading at a three-year high, the franc has hit a ten-year peak, and investors are selling dollars across the board. Trump may have delayed the higher rate tariffs for 90 days, but the damage is still being done.”

Sam Cornford – Head of Trading

USD

Trump’s 90-day reprieve was too late for markets, and traders embarked on an incredible session of pure dollar selling yesterday. There was an enormous safe haven play – equities reverted back to selling, gold hit new all-time highs, and the Swiss franc rallied an incredible 4% against the dollar in in a single day. That is both its biggest single-day gain since 2015 and its strongest level since that year. Indeed, the dollar sold off heavily against all in the G10 except the risk-sensitive NOK, even as rate differentials moved broadly in its favour. That is a hallmark of emerging market currencies, and not the world’s reserve currency. It is an unprecedented crisis of confidence in the dollar. In fact, if we go back to its peak in the week before Trump’s inauguration, it has lost more than 10% against the euro, 11% against the franc, and 7% against the pound. It could go further – it is not clear what Trump can do now to appease the markets.

There was a CPI print yesterday, and the core measure fell much more than expected to 2.8%. But markets rightly cast it off as having few valuable clues on the inflation trajectory now that a huge trade shock is on the way. We get some PPI data and a consumer sentiment report this afternoon.

CHF

The franc’s 4% gain versus the dollar yesterday was its biggest single-day move since the floor removal in 2015. It has been by far the safe haven of choice for investors since the on-again-off-again tariff policy began. It is up another 0.8% today and there is no sign of it stopping for now, although at some point traders will become concerned about the SNB stepping in. The Swiss economy is already teetering on the edge of deflation, and eventually there may not be the appetite to let the franc’s rally depress import prices further. Of course, it may also want to avoid the wrath of the Trump administration, which has complained on several occasions about currency manipulation.

GBP

The UK economy posted a surprise 0.5% GDP growth figure in February – well above the consensus for 0.1%. This was primarily driven by the manufacturing sector, though services also grew quite strongly. While GBP/USD is up 0.7% this morning, GBPEUR is around 0.6% weaker and it is difficult to attribute the pound’s moves to the positive growth figures. The market is trading on the future effects of a trade shock and policy uncertainty – it is struggling to get excited about a positive surprise two months ago.

EUR

The euro has risen nearly 4% over the past couple of days and hit a three-year high this morning. It has the US to thank, though, and there has been little to no news of note out of the eurozone. Investors are buying euros simply because they don’t want dollars. This ‘sell America’ volatility will likely continue today, although we do get a speech from ECB President Lagarde this morning.

Markets

After an initial relief rally following Trump’s 90-day tariff delay, the stock selling resumed yesterday. The S&P 500 closed 3.5% lower. The mood is slightly better today, with European stocks set to open in the green and US futures up around 0.5%.

Main Economic Events (All Times CET)

8:00am: UK GDP
2:30pm: US PPI Inflation
4:00pm: US UoM Consumer Sentiment

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