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The US dollar rose on Tuesday after Donald Trump pledged to levy additional tariffs on imports from Canada, Mexico and China, reigniting concerns about his trade policies.
The dollar index, which tracks a basket of currencies including sterling and the Japanese yen, rose 0.4 per cent on Tuesday morning. The Mexican peso plunged 1.3 per cent against the dollar, the largest major currency fall, while the Canadian dollar fell 0.8 per cent.
The dollar index was down about 0.6 per cent on Monday, following Trump’s nomination of hedge fund manager Scott Bessent as Treasury secretary, an appointment investors took as a sign that the president-elect’s policies may be moderated.
But Trump’s announcement shows he is ready to move quickly on imposing tariffs on China and other countries, said Jason Lui, head of Asia-Pacific equity and derivative strategy at BNP Paribas.
The president-elect announced an additional 10 per cent tariff on China as well as a 25 per cent tariff on “all products” from Mexico and Canada.
On Monday “the market narrative was that the nomination of Scott Bessent [was of] someone who understood the market and could reduce the more extreme policy scenarios”, said Lui.
“But by including Canada and Mexico on day one, it may open the door to faster tariffs on other trading partners,” he added.
The yield on the 10-year US Treasury nudged up 0.03 percentage points to 4.29 per cent. Yields move inversely to prices.
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