|

USD slides amid trade wars – Scotiabank

It’s deadline day for President Trump’s border tariffs on Canada, Mexico and China. Despite comments from Commerce Sec. Lutnick that the president could proceed, reduce or postpone tariffs, Trump commented yesterday afternoon that there was no room left for a deal and that tariffs would start today, stating that 'they have [...] to build their car plants in the US' to avoid tariffs, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Markets reflect concerns about tariff impact

"Wasn’t this about fentanyl? Hefty tariffs will hit growth in Canada and Mexico but will also have a significant chilling impact on activity across key US industrial sectors which are deeply integrated across North America, especially autos, and will likely push up prices at a time when there are already signs of slowing growth momentum and sticky inflation. Yesterday’s February Manufacturing ISM reflected slower growth momentum, contracting orders, weakening employment and a jump in prices—an uncomfortable mixture which likely reflects some of the pressures coming from tariff uncertainty."

"Trump also threatened to tariff countries that kept their exchange rates weak, citing the CNY and JPY. Stocks weakened yesterday on the tariff news and remain soft globally this morning. It may be the stock market’s performance moving forward that defines the guardrails for how US trade policy evolves. US Treasurys have weakened but European bonds are broadly higher. In FX, the MXN is weaker but off early lows. The CHF and JPY are leading gains while gold is up again as investors seek havens from the trade turmoil."

"The USD is weaker overall and it remains notable, and not to say somewhat curious, that the DXY continues to track—roughly—the performance of index in Trump’s first term, suggesting more softness ahead and perhaps another lurch lower is coming shortly. There’s nothing of note on the data calendar for North America today—there’s going to be more than enough going on elsewhere anyway."

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD moves sideways below 1.1800 on Christmas Eve

EUR/USD struggles to find direction and trades in a narrow channel below 1.1800 after posting gains for two consecutive days. Bond and stock markets in the US will open at the usual time and close early on Christmas Eve, allowing the trading action to remain subdued. 

GBP/USD keeps range around 1.3500 amid quiet markets

GBP/USD keeps its range trade intact at around 1.3500 on Wednesday. The Pound Sterling holds the upper hand over the US Dollar amid pre-Christmas light trading as traders move to the sidelines heading into the holiday season. 

Gold retreats from record highs, trades below $4,500

Gold retreats after setting a new record-high above $4,520 earlier in the day and trades in a tight range below $4,500 as trading volumes thin out ahead of the Christmas break. The US Dollar selling bias remains unabated on the back of dovish Fed expectations, which continues to act as a tailwind for the bullion amid persistent geopolitical risks.

Bitcoin slips below $87,000 as ETF outflows intensify, whale participation declines

Bitcoin price continues to trade around $86,770 on Wednesday, after failing to break above the $90,000 resistance. US-listed spot ETFs record an outflow of $188.64 million on Tuesday, marking the fourth consecutive day of withdrawals.

Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Avalanche struggles near $12 as Grayscale files updated form for ETF

Avalanche trades close to $12 by press time on Wednesday, extending the nearly 2% drop from the previous day. Grayscale filed an updated form to convert its Avalanche-focused Trust into an ETF with the US Securities and Exchange Commission.