Trump's Bold Tariff Talk Shakes Global Currencies

President Trump hinted at imposing new tariffs on Canada and Mexico, leading to a volatile reaction in global currency markets. The U.S. dollar recovered some losses after Trump's announcement, despite market fears of universal tariffs. His policy unpredictability continues to drive market volatility.

In a surprising move, U.S. President Donald Trump suggested steep tariffs of around 25% could be imposed on Canada and Mexico soon, sparking concerns over market stability. His remarks on Tuesday came as a challenge to speculations that his administration's policies would adopt a gradual approach.

Despite no specific plans emerging after Trump's first day in office, reports indicate that investigations into trade deficits are underway. Market strategist Shoki Omori from Mizuho Securities noted that the reaction to Trump's tariff threats was immediate, affecting both the Canadian dollar and Mexican peso.

Currencies remained volatile, with the euro easing back against the dollar, and the Japanese yen showing resilience due to expectations of a rate hike by the Bank of Japan. Trump's capacity to unsettle markets with uncertain policy directions remains evident.

(With inputs from agencies.)