The U.S. Dollar is trading near a fresh two-year high per the Bloomberg Dollar Spot Index after this weekend witnessed the imposition of tariffs on imports from China, Mexico, and Canada
Overview
Indeed, with new costs for trading, global markets are feeling the pain as the S&P Futures fell by 1.6%. Traders and investors are concerned about the stability of the supply chains as these nations have also announced retaliation on their part. The shock to the system as protectionism takes form has already knocked the Canadian Dollar to its weakest levels since 2003.
Many on Wall Street are saying that companies will need to adjust as these tariffs are now part of the business equation. Items expected to rise significantly in price include bell peppers, avocados, as well as cars. U.S. President Donald Trump also added that tariffs on European goods would be coming, which has caused a retreat for currencies all across the board with the Mexican Peso dropping by 2.0%. Energy costs will be of focus as gasoline futures in New York are up 6.2%. We will see what else may be in store today as we take a look at data for January from the Institute of Supply Management at 10AM.
What to Watch This Week…
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
MXN ⇓
The Mexican Peso is down to its weakest point since March 2022 as the weekend’s tariff developments made it clear there will be issues moving goods between North American partners. Emerging markets are also headed downward as the fact that the costs were added to the U.S.’s closest and biggest trading allies. Claudia Sheinbaum explained that her government would also be adding new measures in light of what has happened. For now, no news on how this can be resolved or if it is a permanent variable for business.
EUR ⇓
The Euro has fallen by over 1.0% as the tariff talk also included Europe although no official taxes on exports have been levied yet. With China getting hit with 10.0% and North America with 25.0%, European leadership is scrambling a bit wondering what will be coming next. With other moves likely coming, the FX market will be highly volatile and moves will be wild. For now, all very Dollar-positive as it plays its role of safe-haven asset.
