U.S. Dollar Holds Euro, Chinese Yuan, Canadian Dollar Hostage
Donald Trump’s new tariffs have boosted the US dollar’s bullish run in February. This protectionist approach is causing global markets to tremble and investors to reposition themselves. The day is expected to be extremely tense with the U.S ISM manufacturing index and the eurozone’s inflation data.
The announcement of Trump’s tariffs set off a series of market reactions. The US dollar jumped amid these tensions, closing the previous week at 108.5 and opening at 109.78 index points.
The Canadian dollar fell to its lowest level since 2003, and the Mexican peso fell to its lowest level in three years. The Euro continued to decline against the dollar, and the Chinese yuan dipped precipitously, pushing the USD/CNH to the 7.36 resistance level.
Donald Trump imposed hefty customs taxes on the US’s most important trading partners. Reactions were prompt. Among the measures announced were a 25 percent tax on imports from Canada and Mexico and a 10 percent customs duty on Chinese goods.
Prime Minister Justin Trudeau of Canada swiftly retaliated by introducing tariffs on American goods worth over $100 billion.
President Claudia Sheinbaum of Mexico also issued a retaliatory order that targeted American imports. Trump has no plans to end there. He acknowledged that he intended to impose additional tariffs when asked if he would consider incorporating the European Union into his trade strategy. She did not specify the scope or timing of these measures.
China said it would take the matter to the World Trade Organization, while Canada and Mexico threatened retaliation
Markets keenly await the Federal Reserve’s next moves and the governments’ reactions as economic and geopolitical uncertainties increase. Predicting the future movements of the dollar and other major currencies will depend on the evolution of inflation in the eurozone and the performance of the US manufacturing sector.
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