The US Dollar has fallen across the board as money markets are raising bets the Federal Reserve will need to cut interest rates more than anticipated this year. The reason is that the confirmed tariffs on Canada, Mexico & China will have a negative impact on the US economy.
Today, the US signs off on $1.5 trillion worth of tariffs, the largest move since the 1930's and the world now knows President Trump was not bluffing. Canada has retaliated with a 25% levy on US goods, Mexico will respond this weekend and China has increased their tariffs strategically with only some US products hit with 15% tariffs.
Trade wars are bad business as the impact and road is unknown. However, there has been no mention of how long these tariffs will last or if there are any conditions upon which they can change. China's response has been interesting and we are led to believe negotiations will be had amongst the two nations soon.
Practically all stock markets have fallen today (uncertainty) with the US seeing dramatic falls over the last 24-hours ($3.5T wiped from the S&P 500 which the Pound follows closely). The initial reaction has been deemed negative as far as US growth goes, as US importers of goods will simply pass on the higher costs to US consumers, which will negatively impact the economy and households.
The announcement that the US have cut funding to Ukraine is also huge news and creates even more volatility and concern (a key trait of Trump in power). Hours after the confirmation, Europe announced a 'Rearm plan' to support Ukraine and firm up Europe's defense by €800m. This saw a surge in EU & UK stocks (fallen away today) and in their correlative currencies (especially the Euro).
Sterling is down today versus the safe-haven currencies (apart from USD) and by 0.3% against the Euro which is still upbeat on the stock market gain yesterday.
Let's see what happens tomorrow..
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