On November 27, 2024, news has emerged that following President Donald Trump’s promise to impose tariffs on products from Canada, Mexico, and China, the U.S. dollar strengthened against the currencies of these three countries. However, the Japanese yen remained robust amidst the turmoil.
President Trump announced on November 25 that on his first day in office, he would levy a 25% tariff on all products from Mexico and Canada. Regarding China, he criticized Beijing for not taking adequate actions to curb the export of chemicals used in the production of illegal drugs, proposing an additional 10% tariff on various products entering the United States in addition to existing duties.
During the recent election campaign, Trump had mentioned imposing tariffs of 60% or more on Chinese imports.
According to Reuters, trading volumes are expected to be low on Thursday, November 28, before the Thanksgiving holiday in the United States, with the holiday extending to Friday, leading many traders to be on leave. The U.S. dollar initially surged against the Mexican peso by over 2%, eventually rising by 1.57% to 1 USD to 20.5992 Mexican pesos.
Juan Perez, the Director of Monex USA exchange in Washington D.C., told Reuters that due to it being a holiday week, the full impact of Trump’s statements is yet to be seen. He also noted that the peso could easily reach multi-year lows against the dollar.
Simultaneously, the U.S. dollar reached a four and a half year high against the Canadian dollar, rising over 1.5% to 1.4082 Canadian dollars, up by 0.69%. Additionally, the U.S. currency climbed to its highest point against the Chinese yuan since July 30, at 1 USD to 7.26 yuan.
Jane Foley, the Head of Foreign Exchange Strategy at Rabobank, mentioned to Reuters that Trump’s comments outside of normal U.S. trading hours caught many off guard, leaving investors and observers scrambling to comprehend the implications.
After Trump nominated hedge fund manager Scott Bessent as the U.S. Treasury Secretary on November 22, the dollar remained relatively neutral, with the announcement boosting government bonds and lowering yields.
Following Trump’s tariff threats, the Japanese yen remained strong, with the USD/JPY pair ending with a 0.38% decrease at 153.63, while the euro rose by 0.05%, standing at 1.0499 USD.
The U.S. dollar index reported 106.89, slightly higher than the 106.86 from Monday night.
Perez mentioned that the tariff news could make the yen a safe-haven currency. He stated that while any turmoil affecting China might not always be beneficial for Japan, it does create negotiation opportunities for Japan to regain leadership in Asia.
In early Asian trading, the Australian dollar fell to its lowest level in over three months at 0.6434 USD before settling at 0.6465 USD, down by 0.57%. The Australian dollar is sensitive to risks and often reflects the prospects of its largest trading partner, China.
In the cryptocurrency market, the trading price of Bitcoin stood at 93,334 USD, significantly lower than the record high of 99,830 USD set last week.