SINGAPORE- The dollar firmed on Monday as fresh threats of tariffs from US President Donald Trump dented risk sentiment, casting a shadow over commodities markets and putting pressure on the euro and the Australian and Canadian dollars.
Trump said he will announce new 25 percent tariffs on all steel and aluminum imports into the US later on Monday, as well as reciprocal tariffs on Tuesday or Wednesday that will be applied to all countries and matching the tariff rates levied by each nation.
The latest salvo adds to jitters over a global trade war, with China’s retaliatory duties on US goods due to take effect on Monday. Market moves were muted on Monday, with investors still hesitant in placing major bets.
Trump last week kicked off a trade war, first by imposing tariffs on Mexico and Canada and then pausing them, but sticking with duties on Chinese goods. That led to a measured tit-for-tat response from Beijing suggesting some room for negotiations.
“It is unclear if Trump’s latest steel and aluminum tariffs is a negotiation strategy which he may dial down on later,” said Vasu Menon, managing director for investment strategy at OCBC.
“Markets will be on edge and volatile with the escalating trade war and investors need to tread with caution for now and brace for possibly more market turbulence.”
The euro was 0.1 percent lower at $1.0317, staying near the more than two-year low of $1.0125 it touched last week as investors braced for tariffs that Trump has repeatedly threatened against Europe.
The Australian dollar fell 0.1 percent to $0.62705, hovering near the five-year low it touched last week. The Canadian dollar weakened nearly 0.3 percent as Canada is the largest supplier of aluminum metal to the United States.
