Market Summary and Key Outlook (as of April 17, 2025)

Currencies & Forex Markets:

• USDHKD: The Hong Kong dollar remains pegged within a narrow band, with a high risk of the peg breaking. Authorities actively intervene to maintain it, but a break could cause significant market dislocation.
• EURGBP: Outlook has turned slightly bearish due to failing at major resistance levels and technical support breaches, especially with the ECB expected to deliver a dovish stance today. Fundamentally, the reasoning behind targeting 0.83170 relates to tariff negotiations and unwinding recent euro strength.
• EURUSD: Likely to weaken if ECB adopts a dovish bias, given the recessionary pressures and deflationary outlook, compounded by trade tensions.
• GOLD: Strong bullish trend, with Goldman Sachs raising its year-end target to $3,700/oz amid rising recession concerns, central bank demand, and ETF inflows. Should recession risk materialize, prices could overshoot to $4,500/oz.
• USDJPY & AUDJPY: Possible short-term bearish signals on AUDJPY if hourly candles close below 89.600, following recent US-China trade escalation and risk-off sentiment. The JPY spike today suggests safe-haven flows.
• GBPUSD: Slightly bearish expectation; ongoing UK economic data (e.g., soft CPI) and Brexit/ECB outlook support this view.
• CNH (RMB): The RMB is managed carefully, with Morgan Stanley expecting modest depreciation towards 7.50 due to US tariffs, but a disorderly devaluation is unlikely given China’s cap on depreciation and capital controls.

Major Asset & Equity Outlooks:

• Equities: Generally cautious with some instances of short-term weakness, mostly driven by trade tensions, US policy uncertainties, and recent volatility spike.
• Gold: Bullish, backed by recession fears and geopolitics, with Goldman Sachs among the most optimistic on its upside potential.
• Oil: Recent volatile moves linked to broader risk-off sentiment, possibly reflecting fears of trade war escalation and economic slowdown.

US & Global Financial Condition Highlights:

• The White House’s tariff policy remains highly uncertain, with possible escalation to 245% tariffs on China. This prolongs trade volatility and risks to global growth.
• Fed’s Powell is notably hawkish, emphasizing that inflation expectations must stay anchored. This suggests continued monetary tightening or at least holding rates, which supports a stronger dollar in the near term.
• Political and economic uncertainty, particularly related to US-China trade negotiations and tariffs, remains the dominant theme impacting risk assets and currencies.

Summary:

• Bullish on Gold due to recession fears, central bank demand, and safe-haven flows.
• Bearish to neutral on EURGBP, EURUSD, and GBPUSD amid dovish ECB outlook and ongoing trade tensions.
• Cautiously bearish on AUDJPY and other risk-sensitive assets given heightened risk-off sentiment from trade escalation.
• The USDHKD peg remains fragile, but no clear break yet, while the Chinese RMB is managing depreciation cautiously.

Overall, markets remain highly uncertain but with evident risk aversion, monetary policy hawkishness, and safe-haven demand premium, especially favoring gold and some safe currencies like the JPY.