– Trump threatens 25% tariffs on Canada
– Upcoming FOMC minutes will have little to no impact.
– US dollar opens on a mixed note while CAD underperforms.
USDCAD: open 1.4089, overnight range,1.3981-1.4178, close 1.3986, WTI $69.52, Gold, $2631.20
The Canadian dollar got crushed in the early hours of Asian trading and it was all because of Donald Trump. He promised that one of his first official acts when he becomes the 47th President of the United States would be to impose a new 25% tariff on all products coming from Canada.
He wrote. “On January 20th, as one of my many first Executive Orders, I will sign all necessary documents to charge Mexico and Canada a 25% Tariff on ALL products coming into the United States, and its ridiculous Open Borders.” He went on to say: “As everyone is aware, thousands of people are pouring through Mexico and Canada, bringing Crime and Drugs at levels never seen before. Right now a Caravan coming from Mexico, composed of thousands of people, seems to be unstoppable in its quest to come through our currently Open Border.”
The release of the FOMC minutes is unlikely to generate much market movement, as traders are more focused on the upcoming December 18 meeting, which will provide fresh economic forecasts. For now, Trump’s actions and statements dominate trader sentiment.
EURUSD traded within a volatile 1.0425-1.0521 range, currently near the upper end as New York trading begins. The pair initially dipped due to heightened risk aversion following Trump’s tariff announcement but found relief when traders noticed no specific mention of the Eurozone.
Market participants remain uncertain about the scale of the European Central Bank’s rate cut, debating between 25 and 50 basis points at the December 12 meeting.
GBPUSD saw a rollercoaster session, swinging between 1.2507 and 1.2593 and trading near 1.2580 in New York. A slight improvement in the BRC shop price index, which declined 0.6% compared to last month’s -0.8%, was overshadowed by tariff-related market jitters. Some support for the pound emerged after NatWest economists projected that persistent inflation would keep UK interest rates elevated, boosting the currency’s performance against other G-7 peers.
USDJPY moved within a 153.55-154.49 range, weighed down by renewed risk-off sentiment linked to Trump’s tariff plans, lower US Treasury yields, and speculation about further rate hikes from the Bank of Japan.
AUDUSD faced heavy selling pressure, falling from 0.6507 to 0.6434 before rebounding slightly to 0.6493. Similarly, NZDUSD climbed toward the upper end of its 0.5797-0.5857 range, with traders anticipating the Reserve Bank of New Zealand’s policy decision. Markets widely expect a 50-basis-point rate cut, which would bring the benchmark rate to 4.25%.
There are no actionable Canadian or US economic reports today.
