US: Trade policy further supports the USD - AmpGFX
|Analysts at Amplifying Global FX Capital explain that one area where Trump has found fewer speed bumps on the road to delivering his ‘America First’ agenda recently is toughening its stance on international trade.
Key Quotes
“In its spotlight recently is Canada, after the US administration announced tariffs on Canadian lumber imports.”
“The media has reported that Trump has been drafting an executive order to be unveiled late this week or early next week that includes a timeline for exiting the North American Free Trade Agreement (NAFTA). The aim is to renegotiate NAFTA to extract better terms from Mexico and Canada.”
“Last week Trump directed the Commerce Department to investigate whether imports of foreign-made steel was a national security risk. The directive appears to be a precursor for imposing trade restriction on steel imports.”
“These moves undermine confidence in countries that are significant exporters to the US or are more reliant generally on international trade to support their economic growth.”
“This has weakened the CAD and MXN in recent days, pose risks for China and Japan, and, more generally, for countries reliant on global trade. This includes many emerging market and commodity currencies.”
“Stronger global growth indicators have supported a number of emerging currencies this year. However, a shift in focus back to tougher USA trade policies, combined with a tax policy agenda in the US that emphasizes repatriation and drawing investment towards the USA, might swing the pendulum back towards a stronger USD.”
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