USD slides amid trade wars - Scotiabank

It's deadline day for President Trump's border tariffs on Canada, Mexico and China. Despite comments from Commerce Sec. Lutnick that the president could proceed, reduce or postpone tariffs, Trump commented yesterday afternoon that there was no room left for a deal and that tariffs would start today, stating that 'they have [...] to build their car plants in the US' to avoid tariffs, Scotiabank's Chief FX Strategist Shaun Osborne notes.

Markets reflect concerns about tariff impact

"Wasn't this about fentanyl? Hefty tariffs will hit growth in Canada and Mexico but will also have a significant chilling impact on activity across key US industrial sectors which are deeply integrated across North America, especially autos, and will likely push up prices at a time when there are already signs of slowing growth momentum and sticky inflation. Yesterday's February Manufacturing ISM reflected slower growth momentum, contracting orders, weakening employment and a jump in prices--an uncomfortable mixture which likely reflects some of the pressures coming from tariff uncertainty."

"Trump also threatened to tariff countries that kept their exchange rates weak, citing the CNY and JPY. Stocks weakened yesterday on the tariff news and remain soft globally this morning. It may be the stock market's performance moving forward that defines the guardrails for how US trade policy evolves. US Treasurys have weakened but European bonds are broadly higher. In FX, the MXN is weaker but off early lows. The CHF and JPY are leading gains while gold is up again as investors seek havens from the trade turmoil."

"The USD is weaker overall and it remains notable, and not to say somewhat curious, that the DXY continues to track--roughly--the performance of index in Trump's first term, suggesting more softness ahead and perhaps another lurch lower is coming shortly. There's nothing of note on the data calendar for North America today--there's going to be more than enough going on elsewhere anyway."