USD trades mixed as markets await tariff news - Scotiabank

The US Dollar (USD) is trading mixed to slightly weaker against its major currency peers as markets chop around ahead of tomorrow's tariff announcement from the White House. Hhigher tariffs will drive a (one-time) increase in the level of US prices and slow US growth; the larger the tariff, the bigger the impact. European stocks are firmer but US equity futures are in the red and bonds are bid, Scotiabank's Chief FX Strategist Shaun Osborne notes. 

USD mixed to lower versus majors

"The Washington Post reported that the tariff plan is centering on a 20% levy on 'most' imports to the US. This is aggressive but the report notes that this a 'draft plan', suggesting nothing is finalized even at this late stage. Things could clearly change but the last-minute nature of strategizing what is a signature policy of the president suggests that issues and potential pitfalls could get overlooked." 

"Yesterday, the WH press secretary said there would be 'no exemptions at this time' to the reciprocal tariffs the president is due to roll out tomorrow, perhaps providing a glimmer of hope for markets that high tariffs will not persist for any significant period. Yet if that is the case, markets may wonder how the administration can raise the sorts of revenues needed to fund promised tax cuts or effectively encourage manufacturers to reshores supply chains over the long run." 

"The JPY is outperforming and gold hit a new high ($3149/oz). The DXY is holding its consolidation range but remains prone to more technical weakness at least below support at 103.75/80. This morning's US data reports may shed more light on the impact of tariff uncertainty on the US economy. ISM Manufacturing may reflect slowing growth and rising price trends across industry. The headline index is forecast to drop back under the expansion/ constriction threshold (50) to 49.5 in March, from 50.3."