U.S. Tariff Threats Rattle Currency Markets

The U.S. dollar gained strength amidst new tariff threats, with President Trump hinting at duties on imports from Canada, Mexico, and beyond. This triggered market fluctuations, altering previous rate cut expectations and resonating as a long-term concern for global currencies. The Federal Reserve's upcoming meeting adds to investor suspense.

The U.S. dollar firmed against major currencies on Tuesday, fueled by new tariff threats from President Trump. Traders found little respite following Monday's major market moves, which were influenced by the launch of a low-cost Chinese AI model.

Trump announced intentions to impose tariffs on imported computer chips, pharmaceuticals, and steel to encourage domestic production, a stance that overshadowed previous optimism when trade conflicts seemed to ease. Trump's Treasury pick, Scott Bessent, is reportedly advocating for universal tariffs starting at 2.5%.

This shift in trade policy is modifying market expectations, with a focus on potential inflation pressures and currency evaluations. The Federal Reserve's two-day meeting remains a point of interest, as it may provide insights into rate cut timings with ongoing economic uncertainties.

(With inputs from agencies.)