【大華銀行UOB】2025年第二季度全球經(jīng)濟(jì)展望報(bào)告關(guān)稅狂潮抑或虛張聲勢(shì)

Quarterly

GlobalOutlook2Q2025

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RightBYY。u

CONTENT

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ExecutiveSummary

Tarifffrenzyoremptythreatsahead?

GDPGrowthTrajectory

FX,InterestRate&CommoditiesForecasts

KeyEventsIn2Q2025

FXStrategy

Willtheyear-to-dateweaknessinUSDlast?

RatesStrategy

Thenarrativependulumswingsbacktowardsgrowthslowdownconcerns

CommoditiesStrategy

Safehavendemandforgoldintensifieswithphysicalbullionshortsqueeze

FXTechnicals

CommoditiesTechnicals

Glossary

GroupResearchTeam

OutlookbyEconomies

Clickontheeconomytoviewinsight

China

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UnitedKingdom

Vietnam

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Eurozone

HongKong

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SouthKorea

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Japan

Taiwan

Philippines

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Singapore

India

Indonesia

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Australia

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Malaysia

Thailand

UnitedStates

NewZealand

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Informationasof07March2025

ResearchInsights

Exploremore

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Bloomberg:NHUOB<GO>

Contactus

GlobalEcoMktResearch@UOB

2ndofAprwillbeakey

datetowatchastheUSissettoannouncereciprocaltariffs(underthe“Fair

andReciprocalPlan”)oncountriesthatcurrentlyplaceahighertariff

rateonUSorhavenon-

tariffmeasurestoputUS

4

exportersatadisadvantageasperinvestigationstobeconcludedbytheCommercedepartment/USTR.

EXECUTIVESUMMARY

Tarifffrenzyoremptythreatsahead?

Tariffs-EconomicweaponofchoiceforTrump’sAmericaFirstpolicies

Inhissecond(non-consecutive)termasUSPresident,DonaldTrumphasactedwithagreatsenseofurgency,bringingtobearthemostsignificantUStariffincreasesnotseenindecadeswithinlessthantwomonthsinoffice.

Afterimposingablanket10%tariffonallChineseimportstoUSinearlyFeb,itwasfollowedupwithanadditional10%on4Mar,drawingameasuredretaliatoryresponsefromChina.Andafterabriefone-monthreprieve,Trumpimposednew25%tariffsonimportsfromMexicoandCanadaon4Mar,whichCanadarespondedwith25%retaliatorylevyonCAD155bnofUSgoods,whileMexicanPresidentsaidthecountrywillrespondon9Mar(Sun).

ThefocusisnolongerjustonChinabutalsoothertradepartnersincludingUSallies.Attentionisalsoonproductspecifictariffssuchasaluminumandsteelduetobereinstatedon12Mar,andpotentiallyoncopper,lumber,automobiles,semiconductorsandpharmaceuticals.

Andwhiletheremaybesomerollbacks(suchasthe1-monthtariffdelayextendedto50%ofMexicanimportsand38%ofCanadianimportswhicharecompliantwithUS-Mexico-CanadaAgreement,USMCAtill2Apr),thewritingonthewallisclearthatmoretariffsandfrictionsarelikely,atleastinthesecondquarter.2ndofAprwillbeakeydatetowatchastheUSissettoannouncereciprocaltariffs(underthe“FairandReciprocalPlan”)oncountriesthatcurrentlyplaceahighertariffrateonUSorhavenon-tariffmeasurestoputUSexportersatadisadvantageasperinvestigationstobeconcludedbytheCommercedepartment/USTR.InhisrecentjointCongressaddress(4Mar),PresidentTrumpflaggedoutseveraleconomies/blocsthatmaygetcaughtinthislatestUStariffcrosshairsincludingIndia,SouthKoreaandEU.

UOBGlobalEconomics&MarketsResearch

QuarterlyGlobalOutlook2Q2025

Trump2.0:Trademeasuresannouncedto-date(2025)

Date

TradeMeasures

04Feb

USimposes10%tariffon>US$400bnChinesegoodswhile25%onMexicoand

Canada(energyresourcesfromCanadaat10%tariff)receives30-daydelaywithadecisiondueon4Mar.

10Feb

ChinaimposesretaliatorytariffsonUS$14-20bnworthofAmericanproducts

(10%-14%ofUSexportstoChina)includingcoalandLNG(15%)andcrudeoil,agriculturalmachineryandlarge-enginecars(10%).Thisissignificantlylowerinmagnitudeanddonotincludestrategicitems.

27Feb

PresidentTrumpsignedexecutiveordertodirecttheCommerceDepartmenttoexaminepossibleimporttariffsonallformsofcopper.

04Mar

Thedelayed25%tariffsonCanadaandMexicototakeeffecton4Mar.

Chinawillalsobechargedanadditional10%tariffonthesameday,whichwillbeontopofaprevious10%tariffthattookeffecton4Feb,foratotalof20%.

05Mar

China’sretaliatorytariffs:toimposeanadditional15%tariffonUSchicken,wheat,cornandcottonandanextra10%levyonUSsoybeans,sorghum,pork,beef,

aquaticproducts,fruitsandvegetablesanddairyimportsfrom10Mar.

06Mar

UStodelaythe25%tariffon50%ofMexicanimportsand38%ofCanadianimports(whicharedeemedcompliantwithUSMCA)till2Apr.

12Mar

UStoreinstatethefull25%tariffonsteelimportsandincreasetariffsonaluminumimportsto25%,accountingforUS$49bnor1.5%ofitsimports.

02Apr

UStoannouncereciprocaltariffsontradingpartnerswithBrazil,India,SouthKoreaandEUbeingflagged.

USpotentiallytoannouncenewtariffsoncopper,lumber,automobiles,semiconductorsandpharmaceuticals.

Recommendationsunder“AmericaFirstTradePolicy”dueforannouncement.

Asof07Mar2025

Source:USWhitehouse,Newswire,UOBGlobalEconomics&MarketsResearch

InAsia,Vietnam,Taiwan,

SouthKorea,Indiaand

Thailandrecordedthe

largestincreasesintradesurplusesagainsttheUS

between2018and2024.Inourview,theseeconomieswillbemostatriskifTrumpproposesadditionaltariffsortrademeasuresto

reconfigureproductionandtradetotheUS.

Trump’sadditionaltariffonallChinesegoodsandthedelayedtariffsonMexicoandCanadaareaimedatUS’concernsoverillegalimmigrationanddrugssuchasfentanylenteringtheUS.Ontheotherhand,thefactordrivingthe2ndAprUStradeescalationisthelargeandgrowingtradedeficitsthatUScontinuestorunagainstsomeofitstradepartners,withUStotalgoodstradedeficitsreachingarecordUS$1.2trillionin2024,andPresidentTrumpislookingforwaystoaddresstheworseningimbalanceinhissecondterm.

5

Whichcountriesareatriskon2Apr?ThelistoftheeconomiesandblocsthatUSrunthemosttradedeficitswithwillbeagoodstartingplacewithEUperchedneartothetopjustafterChina.InAsia,Vietnam,Taiwan,SouthKorea,IndiaandThailandrecordedthelargestincreasesintradesurplusesagainsttheUSbetween2018and2024.Inourview,theseeconomieswillbemostatriskifTrumpproposesadditionaltariffsortrademeasurestoreconfigureproductionandtradetotheUS.

QuarterlyGlobalOutlook2Q2025

UOBGlobalEconomics&MarketsResearch

UStradedeficitswiththetop20economiesandblocs

Source:Macrobond,UOBGlobalEconomics&MarketsResearch

Weremainwatchfulof

energycostsandhigher

wagesfeedingintogoods

andservicesinflation,but

thebiggestuncertaintyis

themagnitudeandextentofTrump,stariffpolicies.

Shiftingsands:frominflationtogrowthslowdownconcerns.Inourpreviousreport,wehadbelievedthatTrumpwillusetariffthreatsasabargainingchipornegotiationploytoeventuallygainconcessionsfromChinaandkeytradepartners,ratherthanbeinglaidoutasanimmediatepolicyaction.ThathadbeenproventobetoooptimisticandTrump’stoughapproach(insteadofemptythreats)hascreatedamoreuncertaineconomicenvironment.Thatuncertaintyhassetthestageofincreasinggrowthconcerns.Whilethelatest4QGDPreportcorroboratedwiththeviewofastrongUSeconomy,andthattheFedmonetarypolicywasnotoverlyrestrictivetohurtgrowthlastyear(withfinalsalestoprivatedomesticpurchasersadvancingatastrongpaceof3.2%in4Q),recenteconomicindicatorsandsurveyspointtoweakeningoptimismandgrowthtrajectorycoupledwithrisingpricepressures.

Overall,wearekeepingourUSgrowthforecastat1.8%in2025(from2.8%in2024)aswearealreadymoreconservativeinouroutlookversusIMF(2.7%updatedinJan2025)andmostofthemajorUSbanks(mostlyabove2.0%).Thatsaid,therisktoourforecastisdependentonextentofTrump’spolicies,andthatrisknowistiltedtothedownsideastariffsarecomingwellaheadoftheexpansionaryfiscalpolicies.

Asforprices,CPIinflationwillfacethechallengeofTrump’stariffs.Pricespaidforinputsbymanufacturerssoaredto62.4inFeb,highestsinceJun2022,addingtothestickinessandexpectationsforpriceincreasestostayabovetheFed’s2%target.Weremainwatchfulofenergycostsandhigherwagesfeedingintogoodsandservicesinflation,butthebiggestuncertaintyisthemagnitudeandextentofTrump’stariffpolicies.Our2025headlineandcoreinflationforecastsareat2.5%and2.6%respectively,withthebalanceofrisktiltedtowardstheupside.

6UOBGlobalEconomics&MarketsResearchQuarterlyGlobalOutlook2Q2025

Whileweacknowledgethe

ThecombinationofbelowtrendUSeconomicgrowthandhigherinflationrisksdue

downsiderisktogrowthhasincreased,theelevatedstarttoUSCPIinflationinearly

2025andtheuncertainty

toTrump’strademeasuresapproachhasraisedtospectreofUSeconomyfallingintostagflation(i.e.weakerorstagnantgrowthtogetherwithhigherprices).Thatisnotourbasecasefornow,butarisingriskthattheFederalReserve(Fed)mayhaveto

ofTrump’stariffandother

contendwithinitspolicyformulationahead.Whileweacknowledgethedownsiderisk

policieswouldcontinueto

togrowthhasincreased,theelevatedstarttoUSCPIinflationinearly2025andthe

reinforcethecasefortheFedtostayonpauseforlonger.

uncertaintyofTrump’stariffandotherpolicieswouldcontinuetoreinforcethecasefortheFedtostayonpauseforlonger.Wecontinuetoholdourviewofonlyone25-bpscutin2Q2025(likelyJunFOMC)andstayonholdforrestoftheyearat4.25%(upperboundofFedFundsTargetRate).In2026,wepencilinaresumptionoftworatecuts,oneeachin2Qand3Q,bringingtheterminalrateto3.75%in3Q2026.

OurFedfundsforecastisseenashawkishrelativetoBloomberg’sanalystconsensusforratecutsover2025butconvergesdowntowardstheconsensusbyend2026.Themedianforecastfromourpeergrouphas2ratecutspenciledthisyear,whilethefuturesmarketasofend-Febispricing3cutsin2025.

Furthereasingfromselected

Severalothermajorcentralbanks(ECB,BOE,RBAandRBNZ)arepositionedtocontinue

Asiancentralbanksin2025

cuttingtheirpolicyratesin2025.Goingagainstthegrain,theBOJwillcontinueits

remainsourbasecasebut

pathtowardspolicynormalizationin2025,likelywithanothertworatehikes,ifinflation

facedwiththeprospectoflessFedcuts,and

uncertaintiessurrounding

remainsabovetargetandwagegrowthcontinues.Meanwhile,furthereasingfromselectedAsiancentralbanksin2025remainsourbasecasebutfacedwiththeprospect

tradeandtariffpolicies,

oflessFedcuts,anduncertaintiessurroundingtradeandtariffpolicies,AsianFXhas

AsianFXhasthepotential

thepotentialtobecomemorevolatile,assuchAsiancentralbankswilllikelytreadmore

tobecomemorevolatile...

cautiouslywhenitcomestofuturemonetarypolicyeasing.

China’sNPCstillexpecting5%growthin2025

ChinahassetitsGDPgrowthtargetat“around5%”for2025attheNationalPeople’sCongress(NPC),thesameasthepasttwoyearsaspolicymakersattempttoshoreupconfidenceandexpanditspolicysupporttostabilisegrowth.Assuch,therewerenobigsurprisesfromtheannualNPCinMarwhereChinaemphasizedhighqualitygrowthledbydomesticdemand,inparticularbystimulatingprivateconsumption,andtechnologicalinnovation.

China’sstimulusmeasureshavecontinuedtostabiliseitseconomywiththegovernmentpledgingstrongermonetaryandfiscalpolicystimuluswherethefocusisonboostingconsumptionandstrengtheningcapabilitiesinitshigh-techindustries.FrontloadingofindustrialproductionandexportsaheadofTrump’stariffannouncementsalsolikelycontributedtothestrongmanufacturingoutputsofarbutthisisunlikelytobesustained.Privateconsumptionwasmoremoderateandtiltedtowardspurchasesunderthegovernment’ssubsidyprogramanddemandforluxurygoodsandotherconsumerspendingstayedweak.Meanwhile,outlookforinvestmentsremainslacklustrewithsupplychainshiftstoaccelerate.Thepropertymarketcontinuedtostabilizeonthebackofstimulusmeasuresandeasingpurchaserestrictions,andpriceswilllikelyadjustlowerin2025inorderforthesupplygluttoclear(whichweestimatetotakearound30monthsintier-1cities)buttransactionsmaypickup.Overall,confidencehasremainedsoft.

Incomparisontotheofficial

Incomparisontotheofficial5%target,ourforecastforChina’sgrowthin2025isata

5%target,ourforecastfor

moreconservative4.3%onthebackoftheon-goingtradewarwithUS.Someupsides

China’sgrowthin2025isat

likelyfromstrongermonetaryandfiscalpolicysupporttodrivegrowthtowardsthe

amoreconservative4.3%onthebackoftheon-goingtradewarwithUS.

officialtargetof“around5%”thisyear.TherecenttariffescalationbringstotaladditionaltariffonChinesegoodsto20%sincethestartofTrump’ssecondterm,towardsourbasecaseassumptionof25%.China’sretaliationtotheUStariffstodateissignificantlylowerinmagnitudeanddonotincludestrategicitems,suggestingthatChinawantstopreventanall-outtradewar.

QuarterlyGlobalOutlook2Q2025UOBGlobalEconomics&MarketsResearch7

Wearguethatthestill-wideratedifferentialbetweenUSanditsDMpeerswilllikelyspurareboundintheUSDin2Q25beforepullingbackstarting3Q25.

AsiaFXisvulnerableto

furtherweaknessagainsttheUSD.ReciprocaltariffsifannouncedonselectedAsianeconomiescould

triggeranoutsizeddropintherespectivecurrencies.

ThePBOCacceleratedeasingin2024,withthe1Yand5YLPRfallingby35bpsand60bps,respectively,andbanks’reserverequirementratio(RRR)wascutby100bps.In2025,weexpect50-100bpsreductiontotheRRRandafurther30bpscuttothebenchmark7-dayreversereporate(withloanprimeratestofallby30bps).Thesemoveswillbringthe7-dayreversereporate,1YLPRand5YLPRto1.2%,2.8%and3.3%byend-2025.DepreciationpressureontheCNYmayaffectthetimingofanyinterestratecuts.

HereafterisabriefsynopsisofourkeyFXandRatesviews.

FXSTRATEGY

Willtheyear-to-dateweaknessinUSDlast?

Afterstrongrallyin4Q24,DYXpulledbackin1Q25on“tarifffatigue”

Afterastrong4Q24,theUSDpulledbackin1Q25,largelydueto“tarifffatigue”asPresidentTrump’sinitialtariffssalvowaslessintensethanthought,promptingmarketstoscalebackthe“TariffRiskPremium”whichhashelpedboostUSDpreviously.Furthermore,renewedUSgrowthconcernstookcentrestageandUSDslidalongsidefallingUSratesjustasmarketspricedonceagainformoreFedratecutslaterintheyear.Inall,theUSDollarIndex(DXY)whichhadrisentotwo-yearhighsofaround110inearlyJanretracedbacktowards105.7asof5Mar.

MajorFX:HastheUSDtoppedoutagainsttheMajors?

WithintheMajorFXspace,theUSDwasweighedbytherenewedUSgrowthconcerns.USconsumerconfidencefellthemostsinceAugust2021inFebduetouncertaintyovertheTrumpadministration’spolicies.Thedatafollowedrecentdisappointmentsontheretailsales,ISMmanufacturingandhousingdata.Wearguethatthestill-wideratedifferentialbetweenUSanditsDMpeerswilllikelyspurareboundintheUSDin2Q25beforepullingbackstarting3Q25.Overall,weexpecttheDXYtoriseto107.1bymid-2025beforeeasingoffto103.6byend-2025,stillanchoringDXYatthetophalfofpast3-yeartradingrange.

EUR:WhyistheEURsuddenlystronger?

Atthemomentofwriting,theEUR/USDreboundedsharplyinearlyMarto1.08aftertouchingatwo-yearlowof1.0178inearlyFeb.ThemovecoincidedwithanarrowingofUSD’srateadvantageovertheEURasUSyieldstumbledinthefaceofemergingUSgrowthconcerns.ThereisalsoamarkedimprovementininvestorsentimenttowardsEurozoneriskyassetsaswellastheEUR,followingexpectationsofapossiblequickendtoRussia’sinvasionofUkraine.ThelatesteffortbyGermany’sincominggovernmenttoloosenfiscalrestrainsbyspendingmorefordefenseandinfrastructureisalsoseenasastrongfiscalpushthatispotentiallypositivefortheEUR.Thatsaid,amoredovishECBrelativetotheFedandtheriskofUSimposingtariffsonEUgoodsintheneartermwilllikelykeeptheEUR/USDbiasedtothedownsideinthecomingquarter.

AsiaFX:Therecentcalmmaynotlastamidstriskofescalatingtariffs

DuetothenatureoftheexportsandclosetradelinkageswithChina,AsiaFXaremoresensitivecomparedtoitsDevelopedMarket(DM)peerstoUStariffactions.FollowingPresidentTrump’simpositionof10%+10%tariffsonChineseexportstotheUS,thetariffagendaagainstChinaislikelytoescalatefurther.AssuchthecalminAsiaFXin1Q25isunlikelytopersist.Consequently,AsiaFXisvulnerabletofurtherweaknessagainsttheUSD.ReciprocaltariffsifannouncedonselectedAsianeconomiescouldtriggeranoutsizeddropintherespectivecurrencies.Inall,wereiteratetheviewoffurtherAsiaweaknesstill3Q25beforestabilisingfrom4Q25.Overall,wereiterateourforecastforUSD/CNY,USD/KRW,USD/SGD,USD/IDR,USD/THB,USD/MYRandUSD/VNDtorisefurtherto7.65,1,500,1.38,16,900,34.80,4.65and26,000respectivelyby3Q25.

8UOBGlobalEconomics&MarketsResearchQuarterlyGlobalOutlook2Q2025

Inourbasecaseforend

2Q25,weforecastthe10Y

USTat4.30%.Thereafter,

10Yyieldisexpectedto

remainrangeboundalbeit

withrelativelyhigher

volatility.Notwithstanding

thevolatility,weforecast10YUSTtoend4Q25at4.30%.

RATESSTRATEGY

Thenarrativependulumswingsbacktowardsgrowthslowdownconcerns

Sentimentshifttowardsgrowthslowdownconcernsmayhaveroomtorun

PreviousiterationshavelargelyconcludedthatUSpolicyuncertaintywillresultinupsideriskforinflationandassuchresultsinslowornomonetarypolicyaccommodationscenarios.However,morerecenttakesonUSpolicyuncertaintyhavealignedtowardsgrowthslowdownrisksandgreatermonetarypolicyaccommodationpossibilities.Monetarypolicywilllargelybehostagetobythefluidityoffiscalpolicies.Asstated,weseeroomforgrowthslowdownrisknarrativetorun,butwearenotpreparedtomakerecessionourMacrobasecasescenarioatthisstage.

SofterSOFRexpectedinlinewithprojectionofone25bpsFedcutforthisyear

Fornow,weprojectonlyonecutin2025totakeFedfundsdownto4.25%.Extendinginto2026,ourbasecaseassumptionisthatthepolicyratestillhassomeroomtoadjustlowertowardsmoreneutralsettings,withtwomoreprojected25bpsratecutsto3.75%.Inourbasecaseforend2Q25,weforecastthe3McompoundedinarrearsSofrat4.24%.Thereafter,shorttermratesarethenexpectedtodriftloweracross2025intunewithourexpectationsofafurther25bpsratecutsfromtheUSFederalReserve.Eventuallythe3McompoundedinarrearsSofrcoulddropto4.13%by4Q25.

10YUSTyieldisexpectedtoremainrangeboundalbeitwithrelativelyhighervolatility

Ourbasecaseforecastfor10YUSTyieldretainsahigherendstatetermpremiumestimateaswellasincorporatesamorefront-loadedadjustmentpathtothisendstate.Thatsaid,monetarypolicyexpectationsremaintheprimarydriverofourdirectionalforecastforbondyields.Whileourcurrentoutlooksuggestsarangeboundenvironmentin10-yearUSTreasuryyieldsfor2025,certainscenarioscoulddisruptthisviewandpropelyieldtowardsthe5%mark.Inourbasecaseforend2Q25,weforecastthe10YUSTat4.30%.Thereafter,10YUSTyieldisexpectedtoremainrangeboundalbeitwithrelativelyhighervolatility.Notwithstandingthevolatility,weforecast10YUSTyieldtoend4Q25at4.30%.

QuarterlyGlobalOutlook2Q2025UOBGlobalEconomics&MarketsResearch9

COMMODITIESSTRATEGY

Safehavendemandforgolddemandintensifieswithphysicalbullionshortsqueeze

Gold:PhysicalBullionshortsqueezetodrivegoldaboveUSD3,000/oz

Overall,wekeepourpositive

Inthepreviouslyquarterlyreport,wehighlightedthatthemainkeypositivedriverfor

viewforgoldaslongtermsafehavendemandneedswilllikelystaystrongamidstfurtherriseingeopolitical

goldremainsthatoflong-termsafehavendemandwhichislikelytostaystrong.Thissafehavendemandintensifiedsincethestartoftheyearandmanifesteditselfintermsofthegoldbullionshortsqueezewitnessedacrosstheglobeafterthesuddenflowof

risksandeconomicrisksfrom

goldbullionbacktotheUS.Overall,wekeepourpositiveviewforgoldaslongterm

Trump2.0policies.

safehavendemandneedswilllikelystaystrongamidstfurtherriseingeopoliticalrisksandeconomicrisksfromTrump2.0policies.WeherebyupdateourquarterlyforecaststoUSD2,900/ozfor2Q25,USD3,000/ozfor3Q25,USD3,100/ozfor4Q25andUSD3,200/ozfor1Q26.

BrentCrudeOil:PullingbacktoUSD70/bblamidstuncertainglobaldemandandOPECre-supplyrisks

Wemaintainourmoderate

Intermsofsupply,thepotentialunwindingofsupplycutsfromOPEC+remainsanever-

negativeoutlookforBrent

constantthreat.Atthemomentofwriting,OPEC+announcedthatitwillstartunwinding

crudeoil,giventheon-

goingconcernoverweakglobaldemandasaresultofgrowthslowdownfears

asmallportionofthesupplycutinApr.Industryestimatesthisamounttobeabout130kbpdoftheabovementioned2miobpdsupplycut.Overall,wemaintainourmoderatenegativeoutlookforBrentcrudeoil,giventheon-goingconcernoverweakglobal

aswellastheever-constant

demandasaresultofgrowthslowdownfearsaswellastheever-constantthreatof

threatofunwindingof

unwindingofOPEC+supplycuts.WethereforelowerourforecastfurthertoUSD70/

OPEC+supplycuts.

bblfor2Q25and3Q25andthereafterUSD65/bblfor4Q25and1Q26.

LMECopper:RenewedpullbackbelowUSD9,000/MTpossibleasrecentstockpilingboostmaynotbesustainable

ThethreatofpotentialtradetariffsturnedouttobeaneartermpositivedriverforLMECopper.Similartogold,thetariffthreatsresultedinincreasedstockpilingofcopperinventoryonCOMEXwhichintensifiedafterPresidentTrumpconfirmedthegoaheadfor25%blankettariffsonallaluminumandsteelimportsandthreatenedtoimposetariffsoncopperimportstoo.WhiletherecentrecoveryinLMECopperpricefromUSD9,000/MTinJantoUSD9,500/MTinFebisencouraging,pricesareparticularlysensitivetorenewedriskfromglobaltradeandChina’sgrowthslowdown.AssuchwemaintainourmodestnegativeoutlookbutadjustthepriceforecaststoUSD9,000/MTfor2Q25and3Q25,thereafterUSD8,500/MTfor4Q25and1Q26.

10UOBGlobalEconomics&MarketsResearchQuarterlyGlobalOutlook2Q2025

GlobalFX

USD/JPY:USyieldsmayreboundin2Q25asmoretariffsareannounced,possiblyleadingmarketstorefocusonthetariffimpactoninflationagain.Asaresult,USD/JPYmayconsolidateinthecomingquarterbeforeweakeninganew.Overall,ourupdatedUSD/JPYforecastsare152in2Q25,149in3Q25,147in4Q25and145in1Q26.

EUR/USD:Astill-dovishECBrelativetotheFed,theriskofUSimposingtariffsonEUgoodsintheneartermandshort-termoverboughtconditionswilllikelykeeptheEUR/USDbiasedtothedownsideinthecomingquarter.Furtherout,weacknowledgethatprobabilityofthepairreturningbelowparityhasreducedsomewhatcomparedtoourlastreviewinearlyFebasprospectofapeacedealandabrightergrowthoutlookforGermanyandtheEUarebalancingtherisksnow.Overall,ourupdatedforecastsare1.05in2Q25,1.07in3Q25,1.09in4Q25and1.10in1Q26.

GBP/USD:Goingforward,GBPislikelytoremainresilientevenasweexpectaUSDreboundin2Q25.Overall,ourGBP/USDforecastsare1.25in2Q25,1.28in3Q25,1.30in4Q25and1.32in1Q26.

AUD/USD:Inthecomingquarter,itmaynotsosmoothsailingforAUD.WeexpectanescalationoftradetariffsagainstChinawhichmayspillovertotheAUD.However,furtherpolicysupporttoachievetheambitious5%GDPgrowthtargetfor2025setintheChina’sTwoSessionsmayoffsetpartofthepressure.Overall,ourAUD/USDforecastsare0.60in2Q25,0.61in3Q25,0.62in4Q25and0.63in1Q26.

NZD/USD:SimilartootherG-10peers,weexpectNZD/USDtodipfurtherin2Q25beforereboundingfrom3Q25onwards.OurupdatedNZD/USDforecastsare0.54in2Q25,0.55in3Q25,0.56in4Q25and0.57in1Q26.

AsianFX

USD/CNY:Overall,ourupdatedUSD/CNYforecastsareat7.50in2Q25,7.65in3Q25,7.50in4Q25and7.40in1Q26.However,intheeventoftheworst-casescenarioofanoutsized60%tariffagainstChineseimportsintotheUS,wereiteratethatitwouldbedifficultforPBOCtoreignbackmoreextendedCNYweaknessandexpectUSD/CNYtoriseabovethepsychological8.0level,lastseenin2006.

USD/SGD:Goingforward,weexpectapositive-slopingS$NEERandSGD’sreputationasaregionalsafe-havencurrencytohelpbuffertheSGDagainstuncertaintiesduetoTrump’slatesttariffactions,asithadduringthelasttradewarin2018.ThisislikelytotranslatetomoremeasuredmoveinUSD/SGDcomparedtootherUSD/Asiapairs.Overall,ourupdatedUSD/SGDforecastsare1.36in2Q25,1.38in3Q25,1.36in4Q25and1.35in1Q26.

USD/HKD:SincethestartoftheUS(andHongKong)easingcyclelastSep,USD/HKDspentmosttimeatthelowerhalfofits7.75–7.85allowabletradingband,consistentwithpreviouseasingcycles.Assuch,inthisreportwelowerourforecastsofUSD/HKDtoaverage7.78forthenextfourquarterscomparedto7.80previously.

USD/TWD:Overall,weexpecttheTWDtoweakenalongsidetheCNYandregionalpeersforthecomingquartersasTrumpescalateshistariffagendaagainstChina.TheprospectofdirecttariffsagainstTaiwanisatailriskthatneedstobemonitoredaswell.OurupdatedUSD/TWDforecastsare33.8in2Q25,34.5in3Q25,33.8in4Q25and33.4in1Q26.

USD/KRW:Goingforward,withadimgrowthoutlook,adovishmonetarypolicystanceandtariffuncertainty,theriskisthatK