Currency market movements indicate a lack of concern over potential U.S. tariffs, according to MUFG Bank strategist Derek Halpenny. In a note to clients, Halpenny pointed to the resilience of risk-sensitive currencies, such as the Canadian dollar, Australian dollar, Norwegian krone, and Swedish krona, as a sign of market complacency regarding trade risks.
On Tuesday, these currencies outperformed, showing little reaction to the possibility of new U.S. tariffs. “This does not reflect concerns about rising risks of global trade disruptions,” Halpenny wrote. We believe financial markets are underestimating the scale of action.
However, should the U.S. implement a more aggressive tariff plan than anticipated, risk-sensitive currencies could face sharp declines. Markets are now awaiting details of former President Donald Trump’s reciprocal tariff plans, set to be announced at 4 p.m. Eastern time.
As of the latest trading session, the U.S. dollar remained steady at 1.4307 Canadian dollars. Meanwhile, the Australian dollar rose 0.5% to $0.6305, while the Norwegian krone and Swedish krona saw slight gains against the euro.
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