By Alden Bentley, Harry Robertson and Ankur Banerjee
NEW YORK/LONDON/SINGAPORE (Reuters) – A pledge by newly elected President Donald Trump to impose tariffs on products from Canada, Mexico and China sent their currencies lower against the dollar on Tuesday, raising the specter of trade wars was reignited and insecurity in other countries was fueled. currency pairs.
Trump said he would impose a 25% tariff on all products from Mexico and Canada on his first day in office. On China, he said Beijing is not taking strong enough action to curb the export of ingredients used in illegal drugs, imposing “an additional 10% tariff, above any additional tariffs, on all their many products that the United States entering the States of America”. .
Trading was thin ahead of Thursday’s U.S. Thanksgiving holiday, which turns into Friday, when many traders also get underway.
The dollar initially rose more than 2% against the peso and eventually rose 1.57% to 20.5992 pesos.
“Being in the week that we are in, I don’t think the statements have caused all the damage that we have yet to see. But the peso is of course vulnerable to ending up in that multi-year crisis. lows against the U.S. dollar,” said Juan Perez, trading director at Monex USA, in Washington, DC.
The dollar hit a 4.5-year high against its Canadian counterpart, rising more than 1.5% and last rose 0.69% at C$1.4082. The US currency also rose to its highest since July 30, trading at 7.26 yuan.
“I think we had a perfect example last night of why volatility is more likely under Trump,” said Jane Foley, head of FX strategy at Rabobank.
“He can make a comment like that outside of normal U.S. market hours, catching people off guard. It leaves investors, and everyone else, scrambling to figure out what this really means.”
Otherwise, the dollar might have been on the defensive after Trump’s announcement on Friday that hedge fund manager Scott Bessent would become US Treasury secretary, boosting government bonds and sending yields lower.
The rate last fell 0.38% to 153.63 yen, while the euro rose 0.05% to $1.0499.
The price stood at 106.89, compared to 106.86 at the end of Monday.
Perez said the rate news helps the yen as a safe haven. “Any turbulence and unrest that comes against China will not necessarily always be an advantage for Japan, but it opens up space for Japan to regain a leadership position in Asia.”
Scheduled news is on the lighter side this week, with the main events being the minutes of the November meeting of the Federal Open Market Committee, scheduled for 2:00 PM EST/1900 GMT, and the October Personal Expenses Price Index on Wednesday.
Erik Nelson, macro strategist at Wells Fargo (NYSE:), said some investors may have bought the euro to round out their previous bets on the euro-Canadian dollar currency pair, which some had seen as a “Trump trade” on the belief that Europe would get tougher on tariffs affected than Canada.
The Australian dollar fell to a more than three-month low of $0.6434 in early trading in Asia and was last down just 0.57% at $0.6465. The currency is often sold as a liquid proxy for the yuan as China is Australia’s largest trading partner. [AUD/]
In cryptocurrencies, bitcoin was trading at $93,334, well below the record high of $99,830 it reached last week.
Profit-taking crossed the symbolic $100,000 mark after rising more than 40% since the US election on expectations that Trump will ease the regulatory environment for cryptocurrencies.
