NEW YORK: The US dollar rose to a one-week high against the Canadian dollar on Tuesday after President Donald Trump hit Canada with more tariffs, while the euro hit a new four-month peak against the US currency on hopes of a German defence spending deal.
Trump doubled his planned tariff on all steel and aluminum products imported from Canada to 50%, in response to Ontario applying a 25% tariff on electricity sent to the US
The US dollar rose to as high as C$1.4521 against the Canadian dollar, its highest level since March 4. It was last up 0.17% to C$1.4457.
Germany’s Greens Party co-leader Franziska Brantner told Bloomberg News her party was ready to negotiate a deal that would allow for increased state borrowing to boost defence spending and revive growth.
The euro rose to as high as $1.09305, its highest since November. It was last up 0.89% and has gained more than 4% this month as Germany acts to ramp up defence spending.
“The tariffs and the back and forth and the lack of clarity and lack of guidance and lack of achievable goals behind all of this, that’s starting to become the focus of markets and that’s a very negative thing,” said Juan Perez, director of trading at Monex USA.
“Ultimately it brings the US dollar down … because if you are going to bring recessionary pressures then you increase the likelihood that the officials at the Fed are going to continue with interest rate cuts and those bets have already started to go up in the market,” Perez added.
The US dollar remains weaker against its major peers as trade and growth concerns weigh on the greenback.
An equities selloff on Monday has not helped sentiment. Benchmark S&P 500 was trading down 0.42%, while the Nasdaq was up 0.16% on the session.
The dollar weakened 0.08% to 0.88010 against the Swiss franc. Against the Japanese yen, the dollar strengthened 0.18% to 147.53. The greenback has lost more than 2% against both currencies so far in March.