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Donald Trump’s prices swept the money markets early on Monday, the Canadian dollar and the Mexican peso taking a hit while investors rush to assess how levies will affect the largest American trade partners.
The Canadian dollar has been under pressure while trading launched in the Asia -Pacific region, lowering 1.4% at $ 1.473 CA against its American counterpart – the lowest level since 2003. The Peso of Mexico has slipped more From 2% to 21.15 against the dollar. The euro also lost 1%.
Trading volumes are generally very thin at the start of the session, which can exacerbate price movements.
Shape reductions occurred after Trump imposed on Saturday at 25% prices on all imports in Mexico and Canada, with a 10% drop in Canadian energy, and new 10% prices on imports from from China. He also threatened new samples against the EU last week.
Economists have warned that the new prices are likely to speed up inflation in the United States, which increased the treasury yields and the dollar after the election of Trump in November.
“The clearest involvement is a stronger dollar,” said Eric Winograd, chief economist of Alliancebenstein. “A long position in dollars is the cleanest and clearest expression of the trade war that is now launched.”
“The currencies that will suffer the most are those against which the prices are imposed,” added Winograd, noting that “there is a good case to argue that the equity market will suffer a little”.
George Saravelos de Deutsche Bank said that the pricing announcements were “at the most fellow protectionist spectrum that we could have envisaged”, and that the markets necessary to “structurally and significantly reproduce the risk war risk premium”.
The Mexican peso has whipped in recent weeks while traders have examined the announcements of the new Trump administration for indices on speed and the way new samples are extended.
“If the price remains for several months, the exchange rate will reach new historical heights,” said Gabriela Siller, chief economist at the Banco base in Mexico, referring to the number of pesos per dollar. “If the price remains, it will be a structural change for Mexico. . . And Mexico could enter a deep recession that would take years to go out. »»
In comparison, BBVA Mexico analysts said they thought it was unlikely that prices would last a long time. However, if they remained in place, he said they would have a “very negative” impact on investment in Mexico and its competitiveness.
