Canadian Dollar, Mexican Peso, Euro Stabilize after Trump Suspends Tariffs
Tokyo - The Canadian dollar, Mexican peso, and euro held steady against the US dollar on Tuesday after a volatile Monday. On Monday, the currencies rebounded sharply from multi-year lows following the suspension of tariffs on Canada and Mexico by US President Donald Trump.
The Chinese yuan also showed strength in offshore trading, recovering from a record low overnight amidst hopes of a potential deal to avoid 10% tariffs on Chinese goods. The Australian dollar, often a liquid proxy for the yuan, remained stable after rising from near five-year lows.
Following discussions with Mexican President Claudia Sheinbaum, Canadian Prime Minister Justin Trudeau agreed to enhance border enforcement measures, pausing the 25% tariffs set to take effect on Tuesday for 30 days.
Economists had predicted a trade war would harm the economies of all involved and increase consumer prices. However, analysts at TD Securities caution that trade concerns could resurface if there is no progress towards a lasting agreement by month-end.
The US dollar was steady at C$1.4435, retracing 0.85% from Monday's high of C$1.4792, its highest level since 2003. Despite brief dips, TD forecasts a rise to C$1.50 by end-March due to Canada's economic weakness and trade uncertainty.
The US dollar traded 0.3% stronger against the Mexican peso at 20.3939, following a 1.7% drop on Monday. Kyle Rodda of Capital.com suggests that Trump's retreat on tariffs indicates a negotiating strategy and that proposed duties may not be fully implemented.
In offshore trading, the US dollar rose 0.15% against the yuan to 7.3126, after pulling back from a record high of 7.3765 on Tuesday.
The Australian dollar dipped 0.2% to $0.6214, the euro weakened 0.2% to $1.0323, and sterling declined 0.2% to $1.2427. The US dollar gained 0.4% to 155.35 yen, reflecting reduced demand for safe-haven currencies.
Bitcoin stabilized at $101,454, recovering from an overnight low of $91,439.89.