Markets have experienced choppy, two-way price action in response to US President Trump’s reciprocal tariffs imposed on Canada, Mexico and China. These are potentially bigger in speed, scope and breadth than expected and initially saw the dollar strengthen and the yen outperform on safe haven demand. Risk markets sold off, including stocks and growth-sensitive currencies like AUD and NZD.
Volatility was heightened and “headline havoc” was in full effect with an agreement struck later in the day for a one-month delay to Mexican tariffs and after the US close, to Canadian tariffs too. Souring sentiment and concerns over the impact on global growth have driven markets, with retaliatory measures sparking the initial moves. Markets are now alert for any other signs of agreement on more delays to tariff implementation, as well as other possible new tariff announcements.
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