Forex Today: Mexico And Canada Temporarily Cave Into Trump Tariff Pressure -

Forex Today: Mexico And Canada Temporarily Cave Into Trump Tariff Pressure

Feb 04, 2025Jeremy ParkinsonFinance, No picture0

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Mexico and Canada made enough concessions to US pressure for the US to suspend the new tariffs for one month, a wider deal may now be negotiated.

Market news remains dominated by tariffs. The USA implemented new tariffs against Mexico (25%), Canada (25% except energies at 10%), and China (10%). The new tariffs produced strong movements in favor of the US Dollar against the Canadian Dollar and the Mexican Peso. However, yesterday, first Mexico and then Canada announced temporary deals with the Trump administration, which has now agreed to suspend the tariffs for one month while negotiations are conducted to explore the possibility of a wider deal, which would see the tariffs dropped in return for concessions which the US administration sees as in the interest of the USA. The news of these temporary deals saw both the Loonie and the Peso make strong gains which more than recovered all their losses made since the start of this week. Since the weekly open:

USD/CAD is lower by 1.8%.
USD/MXN is lower by 1.8%.

China reacted not by cutting a deal, but by imposing its own new tariff on new US imports, so the new tariffs between these two nations look likely to stand, which seems to have knocked global stocks and the price of crude oil a bit. It is worth nothing that the tariff dispute between the USA and Mexico and Canada was hitting global stock markets quite hard, with the benchmark S&P 500 Index down by over 160 points at one point during the trading day, before stock markets mostly recovered their losses later on news of the deals.

President Trump is still threatened to impose new tariffs against the EU, although the EUR/USD currency pair ended yesterday higher on the day.

Almost all risky assets lost value yesterday before recovering strongly on news of the tariff deals.

Gold traded yesterday at an all-time high above $2,830 per ounce.

Coffee futures continued their long-term bullish trend yesterday, again rising to a new record high price. Trend traders will be interested to be long of Coffee. Although Coffee futures can be expensive, retail traders and investors can gain exposure to Coffee via the COFF ETF, although US taxpayers should beware this is probably a PFIC for tax purposes

Corn futures remain with a valid long-term bullish trend, and most trend traders will want to be positioned long here.

Yesterday’s release of US ISM Manufacturing data was a little higher than expected.

There will be releases later today of: