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

The Canadian dollar and the Mexican peso declined. President Donald Trump’s renewed pledges to slap 25% tariffs on imports from Canada and Mexico on Feb. 1 jolted foreign exchange markets late in the New York trading session, sending currencies from both countries plunging against the US dollar. The Mexican peso slid 1.1% and Canada’s dollar fell as much as 1.2% after Trump told reporters at the White House he would follow through on trade restrictions, which he’d vowed during his inauguration, on Saturday. The Bloomberg Dollar Spot Index erased an early loss to gain as much as 0.2% and the yuan weakened 0.4%.Trump also explained the reason behind this move- People pouring into US, Drugs like fentanyl coming into US and massive subsidies Washington's giving to both countries. in form of deficits.

Trump explains why he'll be announcing 25% TARIFFS on Canada and Mexico:

— People pouring into US
— Drugs like fentanyl coming into US
— Massive subsidies Washington's giving to both countries in form of deficits

'Oil is gonna have nothing to do with it' https://t.co/sFdNSmPbCy pic.twitter.com/jFboZHaqpE

— RT (@RT_com) January 30, 2025

Traders in the $7.5-trillion-a-day foreign-exchange market have been on edge for weeks about the possibility of steep levies on US trade partners beyond Canada and Mexico. The US president has also raised the possibility of raising tariffs to imports from the European Union. As investors waited for more details on Trump’s exact plans, the peso, loonie and yuan steadied in early Asia trading Friday. A blanket tariff on Mexico would see the peso losing 10% of its value against the greenback, according to Deutsche Bank economist Francisco Campos. Money managers are also likely to ditch the nation’s dollar bonds, and expect shares of companies that export to the US to also post losses.