SINGAPORE- The euro bounced off a three-week low touched earlier on Thursday after US President Donald Trump slapped a 25 percent tariff on imported cars and light trucks starting next week, even as the prospect of an all-out trade war dimmed risk sentiment.
The currency market reaction to the duties was largely muted, with most of the action centered around share prices of automakers.
The euro 0.3 percent higher at $1.078625 after touching a three-week low of $1.0733 in early trading. The yen was a shade stronger at 150.17 per dollar.
The Mexican peso weakened 0.5 percent to 20.2054 per US dollar in Asian hours. The Canadian dollar was flat at weaker at 1.4261 per US dollar.
The US imported $474 billion of automotive products in 2024, including passenger cars worth $220 billion. Mexico, Japan, South Korea, Canada and Germany, all close US allies, were the biggest suppliers.
“This potentially drags out trade uncertainty even longer and raises the question of how radical a change to the global trade order is Trump trying to bring about,” said Kyle Rodda, senior financial market analyst at Capital.com
The dollar index which measures the US currency against six rivals, was at 104.29, down 0.33 percent on the day. The index touched a three-week high in the previous session.
Vasu Menon, managing director of investment strategy at OCBC, said the latest actions will probably make cars more expensive for US consumers already worried about inflation and could amplify recession worries.
“Retaliation from countries that have been affected by the latest auto tariffs could worsen the situation for US consumers and automakers and fuel further concerns about inflation and the outlook for the US economy,” he said.
