Markets are having a relatively muted reaction to the latest round of tariff threats from President Trump—25% tariffs on all steel and aluminum imports, effective March 12th, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD trades mixed to slightly lower in quiet trade
“The EU has said it will respond. Australia’s early call for an exemption will be considered by the president. It is perhaps the delayed implementation that is leaving markets cautious but a little cool on developments—there is time for talks to negotiate the tariff threat away perhaps. Trading overall looks pretty quiet—a lull in the action after last week’s market swings. Tokyo markets were closed earlier.”
“The US Dollar (USD) is trading a little lower on the session overall, with the Dollar Index (DXY) losing a little ground on the back of a steady to slightly firmer Euro (EUR). The CAD is underperforming but losses are mild (less than 0.2%). Stocks are flat to slightly lower and bonds are broadly lower across major markets. More tariff talk means potentially slower growth and upward pressure on prices. Crude is up a little while copper and iron ore are lower. Gold hit a new record high of $2942 earlier on haven demand but has since edge back to little changed.
“It’s a light day for data but Fed Chair Powell delivers his semi-annual testimony to Senate lawmakers today (House tomorrow). Prepared remarks start around 10ET. Comments are likely to underscore the Fed is on hold for, perhaps for an extended period, which may give the USD a small lift.”
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