Ankur Banerjee
SINGAPORE (Reuters) – The dollar on Monday after US President Donald Trump has said he will impose a new 25% tariff on all steel and aluminum imports, putting pressure on the euro and goods-centric Australian and New Zealand dollars It's hardened.
Trump also announced mutual tariffs on Tuesday or Wednesday, saying they would apply to all countries and match the tariff rates they collect. The move adds to unrest over the global trade war, with China having a retaliation obligation for US goods scheduled to take effect Monday.
Trump imposed tariffs on Mexico and Canada last week, then suspended, but first launched a trade war with his obligations on Chinese goods. It leads to a measured radio response from Beijing, suggesting room for negotiation.
The euro was 0.1% lower at $1.0317 in early trading, with a low of more than two years above $1.0125 last week, as investors supported tariffs Trump repeatedly threatened against Europe.
The Australian dollar fell 0.21% to $0.6264, hovering near the five-year lowest we mentioned last week, while the Kiwi eased 0.12% at $0.5649. The Canadian dollar has weakened by more than 0.2% as Canada is the largest supplier of primary aluminum metals for the US.
SAXO's chief investment strategist Charu Chanana said the old playbooks are no longer available as China is not a key supplier to the US after the 2018 tariffs.
“However, there may be counterarguments such as slowing demand, so inflation may not be the immediate concern. The bigger concern is uncertainty and a shift towards a more protectionist world.”
Beyond Trump, investors' focus will be on US inflation data on Wednesday and appearances by Federal Reserve Speaker Jerome Powell in front of the House of Representatives on Tuesday and Wednesday.
Analysts say tariffs are inflation and could put more pressure on the Fed to raise interest rates. The market is priced at a 36 basis points reduction this year, down from 42 bps after Friday's bright pay report.
Macquarie strategists have sent a positive message about the labor market and overall economic growth in January, but growing uncertainty has prompted businesses to change their views on the Fed's policy path this year. He said it has become.
“Our updated views could remain in the 4.25-4.5% range as they remained unchanged to the Fed funding rate in 2025. Previously, they could be further in either March or May. It suggested there was only one 25 bps cut.”
