logo
Dollar rises after Trump announces Japan, South Korea tariffs

Dollar rises after Trump announces Japan, South Korea tariffs

CNA5 days ago
NEW YORK :The dollar rose sharply against other major currencies on Monday, after U.S. President Donald Trump announced new tariffs set to go into effect August 1 for a spate of countries including Japan and South Korea.
Trump posted letters to the leaders of several countries on his social media platform, saying that he would impose tariffs of 25 per cent on Japan and South Korea. He also sent letters to the leaders of Malaysia, Kazakhstan, Myanmar, South Africa and Laos, all of which outlined tariffs close to the levels previously announced for each country in April.
The dollar's rise was most pronounced against the yen, and was last up 1.09 per cent at 146.130.
The dollar was up 0.38 per cent to 0.798 against the Swiss franc on Monday.
"There were some country-specific things that were already putting some of these currencies on the back foot," said Brad Bechtel, global head of FX at Jefferies. "But clearly, the news this morning out of the U.S. with Trump and the tariffs is definitely hitting currencies other than the dollar, for a change."
The euro slipped 0.57 per cent to $1.172 having rallied over 13 per cent so far this year.
Investors are concerned that Brussels might not be able to secure deals with Washington ahead of the deadline as progress on agreements with the European Union has been slow, despite multiple rounds of negotiations.
Most U.S. trade partners face the prospect of steeper duties at the end of the 90-day moratorium on U.S. President Donald Trump's "Liberation Day" reciprocal tariffs on Wednesday.
Trump has also threatened an additional 10 per cent tariff on nations aligning with what he deemed to be the "anti-American" policies of the BRICS emerging economies.
The dollar index, which measures the currency against six major counterparts, rose 0.517 per cent to 97.467, reaching a one-week high.
The index extended gains from last week when data reflecting labour market resilience pushed back expectations for imminent monetary policy easing by the Federal Reserve.
Still, the index is close to a 3-1/2-year trough and has declined 10 per cent so far this year as investors questioned the safe-haven status of the U.S. currency and reassessed earlier expectations that the U.S. could be spared in the event of a global economic slowdown.
Sterling weakened 0.26 per cent to $1.362, but stayed near its strongest level since October 2021.
Currencies positively correlated to risk appetite, such as the Aussie dollar and the New Zealand dollar lost 0.79 per cent and 0.74 per cent, respectively ahead of monetary policy decisions in both countries in the coming two days.
The Reserve Bank of Australia is widely expected to cut the cash rate by another quarter point on Tuesday, while New Zealand's central bank is predicted to hold rates steady on Wednesday.
U.S. policy uncertainty weighing on the dollar "may not be as potent as in early April, but we think this correlation still matters," Paul Mackel, global head of FX research at HSBC said.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Wall Street Ends Lower as Trump Targets Canada with Tariffs, Nvidia Hits $4 Trillion
Wall Street Ends Lower as Trump Targets Canada with Tariffs, Nvidia Hits $4 Trillion

International Business Times

time2 hours ago

  • International Business Times

Wall Street Ends Lower as Trump Targets Canada with Tariffs, Nvidia Hits $4 Trillion

The impact of the US president's tariff threats was evident in the US markets. Wall Street slid on Friday, led by a decline in Meta Platforms, after Donald Trump announced that the U.S. was stepping up sanctions against Canada and other trading partners. Trump said he would impose a 35% tariff on Canadian imports and suggested that many others would receive a blanket 15 to 20% import tariff. The S&P 500 dropped 0.33% to 6,259.75, and the Nasdaq was down 0.22% at 20,585.53, while the Dow finished 0.63% lower at 44,371.51. Reports of potential new EU antitrust fines saw Meta fall 1.3%. Nvidia Surges, Drone Stocks Soar Even with the sharp downturn, shares of Nvidia rose 0.5%, to a market value of $4.02 trillion, its highest ever, boosting confidence in AI-related stocks. Meta Platforms shares dropped by 1.3% after reports said it's unlikely to change its EU data practices, possibly facing new antitrust fines. Defense companies AeroVironment and Kratos Defense surged about 11% each after the U.S. Defense Secretary said more drone production is needed. Kraft Heinz gained 2.5% on news of a potential breakup of the company, and Levi Strauss surged 11% after boosting its full-year profit outlook. Looking Ahead to Earnings Season Volume was light, with 15.4 billion shares changing hands on U.S. exchanges, below the 20-day average of 18.3 billion. The S&P 500 was down 0.3% for the week, while the Dow dropped 1% and the Nasdaq lost 0.1%. Analysts have expected earnings in the second quarter to rise 5.7% from a year earlier, pulled up by tech but dragged down by energy and consumer sectors. Next week's results from JPMorgan, Netflix, and Johnson & Johnson could show whether Trump's tariffs are cutting into corporate profits.

New Trump tariff threats rekindle investor concerns about trade and timelines
New Trump tariff threats rekindle investor concerns about trade and timelines

Business Times

time4 hours ago

  • Business Times

New Trump tariff threats rekindle investor concerns about trade and timelines

GLOBAL investors got a harsh reminder of the risks around trade tariffs and US President Donald Trump's deal-making on Saturday (Jul 12), after he threatened fresh tariffs on his biggest trading partners in Europe and Mexico. Trump said in social media posts on Saturday he would impose a 30 per cent tariff on imports from Mexico and the European Union starting on Aug 1. The announcement comes after weeks of talks with key US trading allies that failed to reach a more comprehensive trade deal. It also follows a week marked by heightened trade tensions, after Trump issued new tariff announcements for a number of other countries, including Japan, South Korea, Canada and Brazil, as well as a 50 per cent tariff on copper. 'Escalate to de-escalate' The EU had hoped to reach a comprehensive trade agreement with the US, but Trump's letter punctured the recent optimism in Brussels over the prospects for an 11th-hour agreement between the major economies. He did, however, leave an opening for additional adjustments. 'If you wish to open your heretofore closed trading market to the United States, and eliminate your tariff, and non-tariff, policy and trade barriers, we will, perhaps, consider an adjustment to this letter,' Trump wrote. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up European Commission President Ursula von der Leyen said the bloc 'took note' of Trump's letter and warned that such a move would damage both economies. The bloc's ambassadors are scheduled to meet Sunday to discuss the trade situation. 'We remain ready to continue working towards an agreement by Aug 1,' von der Leyen said in a statement. 'At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required.' Three EU officials told Reuters on Saturday that Trump's 30 per cent tariff threat is a negotiating tactic. Michael Brown, a senior market strategist at Pepperstone in London, said it seemed to be a 'escalate to de-escalate' strategy by Trump, aimed at getting trading partners to negotiate and extract concessions. The EU had been facing the threat of US tariffs at 50 per cent on its steel and aluminium exports, 25 per cent on cars and car parts, and 10 per cent on most other products. The US had also been looking into further tariffs on pharmaceuticals and semiconductors. Brown said the risk was that the EU takes the new tariffs poorly and announces countermeasures that escalate trade tensions to levels in early April, when markets were whipsawed by Trump's initial 'Liberation Day' tariffs. 'Depending on what happens in the next 24 hours or so, I imagine that the knee-jerk move is euro-negative, eurozone asset-negative,' he said. 'And then, as calmer heads prevail, it comes back to the fact that, is it just a negotiating gambit?' Despite some modest rockiness this week, the benchmark S&P 500 ended down just 0.3 per cent on the week, not far from record-high levels. European stocks took a slight hit on Friday as markets waited for the promised letter on tariffs. The pan-European Stoxx 600 index lost 1 per cent and snapped a four-day winning streak, clocking its biggest single-day decline in over three months. Mexico has more to lose, given that the US is its largest export market, and the economy is already feeling the impact of the uncertainty over trade. In his letter to Mexican President Claudia Sheinbaum, Trump said the country has been 'helping me secure the border', but added that it was not enough. Trump added that if Mexico 'is successful in challenging the cartels and stopping the flow of fentanyl', the US would consider adjusting the levies. 'These tariffs may be modified, upward or downward, depending on our relationship with your country,' he added. The letter is silent on whether the US will preserve a carve-out for goods traded under the United States-Mexico-Canada Agreement, which have been exempt from the current 25 per cent rate. The administration has said it will keep the exemption for Canada. 'Moment of capitulation' US stocks have rebounded after plunging in April following Trump's announcement of sweeping global tariffs. Trump had paused many of those steep tariffs, but issued new levies this week with an Aug 1 date for them to go into effect. The CBOE Volatility Index, Wall Street's 'fear gauge', closed on Thursday at 15.78, its lowest closing level in nearly five months, although it moved back above 16 on Friday. Karl Schamotta, chief market strategist at payments company Corpay in Toronto, said the stream of tariff announcements could reignite market concerns. 'At some point soon, it will become clear that Trump's protectionist agenda has not been appropriately discounted in currencies, in asset prices, or in measures of volatility,' he said. 'A moment of capitulation is coming, in financial markets, or in the White House itself.' While markets are less sensitive to headlines than a few months ago, Citi strategist Scott Chronert said in a note on Friday that 'we will need some positive trade developments by the White House's Aug 1 deadline to hold recent equity market gains'. The current weighted average tariff in the US is about 16 per cent, up from 2.5 per cent at the start of the year, UBS economists said on Friday. That would rise to about 18 per cent, including the country tariffs announced in this week's letters. REUTERS, BLOOMBERG

Investors react to Trump's 30% tariffs on EU and Mexico
Investors react to Trump's 30% tariffs on EU and Mexico

CNA

time6 hours ago

  • CNA

Investors react to Trump's 30% tariffs on EU and Mexico

U.S. President Donald Trump announced on Saturday a 30 per cent tariff rate for goods imported from the European Union and Mexico, starting on August 1. The EU had initially hoped to reach a comprehensive trade agreement with the U.S. for 27-country bloc, but until Trump's social media post on Saturday it was unclear if it might get a letter announcing more tariffs or when an agreement might be finalized. Earlier this week, Trump issued new tariff announcements for a number of countries, including Japan, South Korea, Canada and Brazil, as well as a 50 per cent tariff on copper. MICHAEL BROWN, SENIOR MARKET STRATEGIST, PEPPERSTONE, LONDON: "There are still three weeks until August, 1 which is a lifetime in this sort of situation. Again, I think it's all part of this 'escalate to de-escalate' strategy in terms of trying to bring people to the table and get some more concessions out of them. In terms of the EU one specifically, I guess you could argue that the threat (from Trump) the other day was 50 per cent." "The risk is whether the EU, because all of the reporting has been around the U.S.-EU deal is close, take this poorly and actually go: 'OK, fine, well, we're just going to throw in place some countermeasures' and then things start to escalate once more, which I think really then starts to change the calculus away from, this is just a negotiating gambit and back towards Liberation Day." "Depending on what happens in the next 24 hours or so, I imagine that the knee-jerk move is euro-negative, eurozone asset-negative. And then, as calmer heads prevail, it comes back to the fact that, is it just a negotiating gambit? "Certainly, I think that the initial reaction will be a case of, actually, this is pretty devastating if it does come into effect and we need to price, not necessarily the full probability of it coming into effect, but at least there needs to be a chance, discounted that an export-led economy to its main market has got a 30 per cent tariff on it, and it's just not going to be able to cope with that." KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO: "Traders spent much of the last week hedging against a broadening in the president's tariff schedule, but at 30 per cent, today's action has likely topped expectations. 'Although rising tariffs remain a bigger threat to the US itself, it is fair to expect the euro and Mexican peso to come under renewed selling pressure at tomorrow's Asia open. 'At some point soon, it will become clear that Trump's protectionist agenda has not been appropriately discounted in currencies, in asset prices, or in measures of volatility. A moment of capitulation is coming, in financial markets, or in the White House itself." MATHIEU SAVARY, CHIEF STRATEGIST -EUROPE, BCA RESEARCH, MONTREAL: 'Trump's strategy is to make outrageous demands, then bring them down, then make another push to win some last-minute concessions, and then a trade deal materializes. It's a framework that we remember from Trump in his first presidency and that is what is happening now." 'Whatever is said now doesn't matter; what matters is where we will settle.' Savary said he expects that Europe eventually 'will have to resign itself to accept a 10 per cent tariff, but that is something that the EU can actually handle." MARK MALEK, CHIEF INVESTMENT OFFICER, SIEBERT FINANCIAL, NEW YORK: 'If you look at the 22 or 23 letters that went out, 30 per cent now is the average proposed across the board number here, which is significantly higher than the 10 per cent that the market had been accepting as a baseline figure." If this new, higher tariff level sticks, 'it has significant implications for the trade relationship with the EU and the US economy, since we import everything from luxury cars to industrial chemicals.' "Markets have been moving higher on the assumption that these trade talks would be resolved. But that comfort is going to turn into a headwind for the market unless we get some real results one way or another. The market has been giving Trump a pass so far recently on tariff talks, but earnings season could upset that balance' if companies release weaker-than-expected results or include warnings about the impact of tariffs on their future revenues and profits. 'A trading day like yesterday (Friday) really wasn't a huge decline given that we're still sitting right below all time highs, and right ahead of earnings season. But if markets stop giving Trump the benefit of the doubt, who knows?' SAM STOVALL, MARKET STRATEGIST, CFRA, PENNSYLVANIA: 'I think investors will still just take a wait and see attitude and that in the end markets will respond to certainty. That will come if get an unexpectedly hot reading on inflation, as tariffs filter their way down into the hard data. "Unless and until we get a change in the data, I think the path of less resistance is higher' for U.S. stocks.'

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store