EUR/USD 10 mins
The market is continuing to weigh the first day of Trump’s new term.
The latest move in market seems to be that he’s not really serious about putting on 25% tariffs on February 1. His own words weren’t exactly declarative.
“We are thinking in terms of 25 per cent on Mexico and Canada because they are allowing vast number of people, Canada is a very bad abuser also, vast numbers of people to come in and fentanyl to come in,” he told reporters.
The ‘thinking in terms’ is low-conviction, especially by Trump’s standards.
There is also is comments on TikTok, which he tied back to Chinese tariffs after signing an executive order to keep the app going for 75 days. He said he could “certainly” put tariffs on China if it rejects a deal.
“Ultimately [Beijing] would approve it because we’d put tariffs on China,” Trump said on signing the order. “I’m not saying I would, but you certainly could do that.”
It all sounds very transactional and not like the 60% tariffs on China he promised during the campaign.
So this will be the ebb and flow and the market will have to figure out what’s noise and what’s news. US 10-year yields are down 5.1 bps today in a sign that a trade war is less likely (and the deficits that go with it). That’s led to some US dollar selling in the past hour or so.