Forex Today: Markets take a break from tariff headlines, focus on BoC and US inflation
Here is what you need to know on Wednesday, March 12:
Following a volatile American session that was dominated by tariff headlines on Tuesday, financial markets quiet down early Wednesday. The US economic calendar will feature Consumer Price Index (CPI) data for February. Later in the day, the Bank of Canada (BoC) will announce monetary policy decisions.
US President Donald Trump announced on Tuesday that he will impose an additional 25% tariff, in addition to the previously announced 25%, on steel and aluminum imports from Canada. In response, Ontario Premier Doug Ford announced that they will place a 25% surcharge on the electricity that they supply to more than 1 million homes in the US. Trump backed off following this development and the White House said that only the previously planned 25% tariffs on steel and aluminum products from Canada and all other countries will go into effect with no exceptions or exemptions.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.51% | 0.03% | 0.31% | 0.72% | 0.44% | 0.35% | 0.32% | |
| EUR | 0.51% | 0.50% | 0.81% | 1.25% | 1.05% | 0.84% | 0.72% | |
| GBP | -0.03% | -0.50% | 0.27% | 0.71% | 0.54% | 0.27% | 0.28% | |
| JPY | -0.31% | -0.81% | -0.27% | 0.42% | 0.20% | -0.04% | 0.09% | |
| CAD | -0.72% | -1.25% | -0.71% | -0.42% | -0.33% | -0.38% | -0.43% | |
| AUD | -0.44% | -1.05% | -0.54% | -0.20% | 0.33% | -0.20% | -0.27% | |
| NZD | -0.35% | -0.84% | -0.27% | 0.04% | 0.38% | 0.20% | 0.06% | |
| CHF | -0.32% | -0.72% | -0.28% | -0.09% | 0.43% | 0.27% | -0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Early Wednesday, European Commission President Ursula von der Leyen said that the European Union (EU) has launched 'swift and proportionate countermeasures' on US imports in response to steel tariffs. Similarly, UK Trade Minister Jonathan Reynolds said that it is disappointing that the US has decided to go ahead with global tariffs on steel and aluminum, adding that they will keep all options on the table and won't hesitate to respond in the national interest. Meanwhile, Australia’s Prime Minister Anthony Albanese noted that they will not impose reciprocal tariffs on the US, explaining that retaliatory measures would only increase costs for Australian consumers and fuel inflation.
The US Dollar (USD) came under selling pressure in the early American session on Tuesday and the USD Index dropped to its weakest level since mid-October near 103.20. Early Wednesday, the USD Index stages a rebound and trades in positive territory above 103.50. US stock index futures also cling to modest gains in the European morning after Wall Street's main indexes registered losses on Tuesday.
After fluctuating wildly in the second half of the day, USD/CAD closed virtually unchanged on Tuesday. The pair edges higher on Wednesday and trades above 1.4450. The BoC is widely expected to lower the policy rate by 25 basis points to 2.75% after the March meeting.
EUR/USD gathered bullish momentum and climbed to its highest level in five months near 1.0950 on Tuesday. The pair corrects lower on Wednesday and trades below 1.0900 in the European morning.
GBP/USD gained more than 0.5% on Tuesday and rose above 1.2950. Pressured by the USD recovery early Wednesday, the pair retreats toward 1.2900.
USD/JPY holds its ground and rises toward 148.50 after posting modest gains on Tuesday. Bank of Japan Governor Kazuo Ueda said on Wednesday that it is natural for long-term rates to shift in line with the market view on the outlook for short-term policy rates.
Following Monday's decline, Gold rebounded on Tuesday and gained nearly 1% on the day. XAU/USD struggles to preserve its bullish momentum but manages to hold above $2,900 on Wednesday.
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
