Key points:

• The overvalued USD may be showing signs of correction as Trump’s trade war with China pushes the US economy toward a potential recession, raising fears that could force the US Fed to cut rates aggressively

• Although Trump temporarily suspended his “Liberation Day” tariffs for 90 days, ongoing US-China tensions, persistent auto, steel, and 10% global tariffs, and looming pharma duties are keeping recession concerns alive.

• Emerging markets face intense pressure. The ZAR’s depreciation is compounded by domestic political uncertainty, with the Government of National Unity (GNU) at risk over a VAT hike dispute. The Democratic Alliance’s resistance, backed by Parliament’s Budget Office, threatens fiscal gridlock, delaying key bills.

• GNU cooperation could stabilise sentiment, offering cautious optimism for a rand recovery amid a volatile global market where the VIX hit a post-COVID-19 peak on April 8, signalling sustained risk aversion.