The US dollar faces pressure, struggled near a three-month low as global markets reacted to rising trade tensions. The latest tariffs imposed by the US and retaliatory measures from China and Canada have heightened fears of an escalating trade war. As a result, investors are cautious, impacting major currencies and global equity markets.
China’s yuan remained strong in offshore trading after gaining 0.7% in the previous session. The rally followed the opening of China’s National People's Congress (NPC), where Beijing reaffirmed its 5% economic growth target for 2025.
The euro climbed to a near four-month high as Germany announced a 500-billion-euro infrastructure fund. Political consensus on fiscal expansion bolstered confidence in the European economy. Meanwhile, the British pound held firm near a three-month high, benefiting from the US dollar’s decline.
On the commodities front, crude oil fell to a six-month low, reflecting concerns about weakening demand. In contrast, Bitcoin stabilized around $87,000 after a volatile trading week.
Equity markets showed mixed reactions to the latest developments. In Asia, Australian stocks dropped 0.9%, while Japan’s Nikkei slipped 0.2% after an early rise. Hong Kong’s Hang Seng futures pointed 0.6% higher, signaling potential recovery.
On Wall Street, the S&P 500 lost 1.2% overnight, but futures indicated a 0.6% rebound. The MSCI World Equity Index edged 0.1% higher, though it remained 1.9% lower for the week.
The US intensified trade restrictions by imposing a 25% tariff on imports from Mexico and Canada, along with higher duties on Chinese goods. In response, China and Canada retaliated, while Mexico hinted at further action. These developments have raised concerns about global economic slowdown, affecting investor sentiment.
The US dollar index, which measures the greenback against six major currencies, remained steady at 105.60 after a sharp 1.9% drop over the past two days. The euro surged to $1.0637, its highest level since November 13, while the British pound held firm at $1.2786.
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The US dollar faces pressure as trade war tensions escalate, with China and Canada retaliating against new US tariffs.
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