AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
Highlights
- Trade-related currencies faced a sharp decline against the US dollar.
- Canadian dollar hit a five-year low amid tariff concerns.
- Mexican peso and Chinese yuan weakened further after tariff threats.
Trade-sensitive currencies, including the Mexican peso, Canadian dollar, and Chinese yuan, experienced significant pressure against the US dollar following escalated concerns over potential trade tariffs. U.S. President Donald Trump announced plans to impose 25% tariffs on imported goods from Canada and Mexico, starting next month. The announcement dampened optimism around a more moderate stance on trade policies.
The Canadian dollar (CAD) plunged to its lowest level in five years, amplifying concerns about the country’s exposure to U.S. trade tensions. Similarly, the Mexican peso (MXN) dropped by over 1%, reflecting market fears regarding increased costs for goods crossing the U.S.-Mexico border. Although no immediate tariffs were declared on China, the Chinese yuan (CNY) also weakened against the U.S. dollar in the initial hours following the news, likely reflecting broader concerns about global trade instability.
In addition to the tariff plans targeting Canada and Mexico, Trump previously threatened to implement a 60% duty on Chinese imports, exacerbating uncertainties around trade relations with the world’s second-largest economy.
The Australian dollar (AUD), which is highly correlated with the Chinese yuan due to Australia’s substantial exports to China, also faced declines. It slid to $0.6246 from an earlier peak of $0.6288, mirroring last week's five-year low of $0.6129. The downward movement highlights how China’s economic ties influence the Australian economy.
Market participants are likely to closely monitor developments in trade policy as increased tariffs could ripple across economies dependent on exports. Currency fluctuations underscore the vulnerability of trade-linked economies amid policy shifts and protectionist measures. The focus will remain on how major economies, particularly those in North America and Asia, respond to the challenges posed by evolving trade dynamics.
While currency movements provide a snapshot of market sentiment, they also emphasize the far-reaching impact of global trade tensions. For businesses and governments in export-driven economies, the stakes remain high in navigating the uncertain terrain of international commerce.
