The US Dollar (USD) has strengthened broadly overnight after President Trump renewed his threat of hefty tariffs, specifically mentioning auto tariffs for Canada and Mexico. The FT reported that Treasury Sec. Bessent favored universal tariffs starting at 2.5%. The USD is trading firmer on the session, but significant gains are limited absent renewed incentives.
After yesterday’s stock market swings, it’s back to tariffs for FX today. The US Dollar has strengthened broadly overnight as President Trump renewed his threat of hefty tariffs and specifically mentioned auto tariffs for Canada and Mexico. The FT reported that Treasury Sec. Bessent favored universal tariffs starting at 2.5%, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
The ZAR and—despite the tariff threat—MXN are the session’s outperformers, however, with improved risk appetite perhaps offsetting some of the tariff negatives for the peso. The shake out in tech stocks boosted demand for havens yesterday, with the bid in Treasurys pulling US 10Y yields back to the 4.50% point. That may be something of a pivot point for FX in the near-term—still lower US yields will undercut the USD a little more while a rebound in yields should backstop the USD at least.
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