Trump confirmed yesterday that his import tariffs will be in place in 15 days time, which could cause major volatility for the USD whilst decisions are made about which countries will be liable for these tariffs. The table below shows the difference in USD you could have achieved when buying £200,000.00 during the high and low points of the past month.
|Currency Pair||% Change||Difference on £200,000|
The US Dollar made gains against its major currency counterparts throughout the course of yesterday, leading up to Donald Trump’s speech from the White House yesterday evening announcing the introduction of tax tariffs on steel and aluminium imported into the US, at 25% and 10% respectively.
The US has an annual trade deficit of $800bn per year which President Trump has pledged to reduce, whilst committing to protecting and rebuilding the American manufacturing industry, urging businesses and manufacturing plants to move to the US. Of this figure, a $500bn per year deficit is from importing goods from China.
Trump has promised to also review and negotiate the trade agreement between the US and China too, proposing a ‘reciprocal tax programme’ whereby the US will mirror any tax imposed from other countries.
At this stage there will be no tariffs for Mexico and Canada, so long as the NAFTA (North American Free Trade Agreement) is renegotiated to make it ‘fair on America’, and if a deal is not reached he confirmed that the US will terminate the agreement.
There will be a period of 15 days before any tariffs are implemented, while the US assess which countries should be liable for the tariffs, and in my opinion this period is likely to be a very volatile time for US Dollar exchange rates. EUR/USD is the most traded currency pairing globally, and as such I would expect the US Dollar to continue to strengthen against the Euro as this news has the capacity to damage the European economy severely, as the hiking of tariffs on car import from Europe will also be reviewed. Clients with a US Dollar currency requirement would be wise to keep a close eye on this story as it unfolds. Detailing your requirements to your account manager here can mean the difference of trading at the best levels.
This afternoon Nonfarm Payrolls, released on the first Friday of each month, will be announced at 1.30pm showing the number of new jobs created in February, and are a key driver to US Dollar exchange rates. This is followed by unemployment rate, and average earnings, which are all key to deciding future interest rate changes, and as such could provide a volatile afternoon for the US Dollar.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here.
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