Canadian Dollar, Mexican Peso drop amid Trump's tariff threats

The Canadian dollar and the Mexican peso declined on Tuesday following U.S. President Donald Trump's inauguration, during which he indicated plans to impose new tariffs on imports from Canada and Mexico.

Trump said he was mulling over additional tariffs of around 25% which could be announced on Feb. 1, but did not provide any other details.

In response to the tariff threats, the Mexican peso and the Canadian dollar fell sharply against the U.S. dollar.

The Mexican peso's USD/MXN  pair jumped 1.2% to 20.7126 pesos as of 04:43 GMT. The Canadian dollar's USD/CAD  pair rose 0.8% to 1.442 Canadian dollars.

These declines reflect investor concerns over the potential negative impact of such tariffs on the economies of both nations, which have strong trade ties with the United States.

The US Dollar Index , which measures the greenback against a basket of major currencies, rose by 0.2%, recovering from previous losses. This rebound was supported by the anticipated tariffs, as well as expectations of tighter U.S. monetary policy.

Market analysts noted that the proposed tariffs could disrupt supply chains and trade flows, leading to increased volatility in currency markets. The energy sector, in particular, may face significant challenges, given Canada's role as a major oil supplier to the U.S.

Source: Investing.com