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FOREX: Conflicting Tariff Headlines Continue to Dominate USD Sentiment

FOREX
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  • Currency markets have been extremely volatile late Friday, amid conflicting reports on the implementation of tariffs by the Trump administration. Initially, a Reuters exclusive suggested that tariffs on Mexico and Canada could be delayed until March 1, but will include a process for the countries to seek specific exemptions for certain imports.
  • This stoked a swift move lower for the greenback, with the USD index extending to session lows following the WMR fixing window which also appeared to be dominated by USD supply. The likes of USDCAD and USDMXN pushed firmly lower, with the former erasing the entirety of the late Thursday surge to trade back below 1.44.
  • However, this news was then refuted by White House Press Secretary Karoline Leavitt, who said President Trump intends to move ahead with plans on Saturday to impose 25% tariffs on Mexico and Canada and a 10% levy on China, denying the prior report that he planned to delay the implementation by a month.
  • Sharp reversals of the prior moves were then seen, as the greenback spiked aggressively higher and the USD index then made a fresh session high. USDCAD reversed around 100 pips and USDMXN printed back above 20.70 from 20.49 prior to the comments amid major equity indices coming under pressure.
  • For the majors, EURUSD echoed the sentiment, rising to 1.0434 before reversing back to 1.0375 as we approach the close. USDJPY has been more insulated to the tariff volatility, however, spot stands a solid 110pips off session lows at 155.10.
  • Tariff developments are sure to dominate across the weekend and into next week, however, we will also have the Bank of England and US employment data to highlight the economic calendar.
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  • Currency markets have been extremely volatile late Friday, amid conflicting reports on the implementation of tariffs by the Trump administration. Initially, a Reuters exclusive suggested that tariffs on Mexico and Canada could be delayed until March 1, but will include a process for the countries to seek specific exemptions for certain imports.
  • This stoked a swift move lower for the greenback, with the USD index extending to session lows following the WMR fixing window which also appeared to be dominated by USD supply. The likes of USDCAD and USDMXN pushed firmly lower, with the former erasing the entirety of the late Thursday surge to trade back below 1.44.
  • However, this news was then refuted by White House Press Secretary Karoline Leavitt, who said President Trump intends to move ahead with plans on Saturday to impose 25% tariffs on Mexico and Canada and a 10% levy on China, denying the prior report that he planned to delay the implementation by a month.
  • Sharp reversals of the prior moves were then seen, as the greenback spiked aggressively higher and the USD index then made a fresh session high. USDCAD reversed around 100 pips and USDMXN printed back above 20.70 from 20.49 prior to the comments amid major equity indices coming under pressure.
  • For the majors, EURUSD echoed the sentiment, rising to 1.0434 before reversing back to 1.0375 as we approach the close. USDJPY has been more insulated to the tariff volatility, however, spot stands a solid 110pips off session lows at 155.10.
  • Tariff developments are sure to dominate across the weekend and into next week, however, we will also have the Bank of England and US employment data to highlight the economic calendar.