On Tuesday, the American dollar strengthened in a wide range after the introduction of tariffs on Chinese goods, which provoked an immediate response from Beijing and a ban on the Chinese yuan and Australian dollar. The Canadian dollar lost 0.4% against the US dollar, dropping to C$1.4485, rebounding from a sharp drop since 2003 to C$1.4792 on Monday.
Official trading of the yuan is expected to resume in mid after the lunar new year. The Australian dollar fell 0.7% to $0.6186, but remained above the five-month minimum of $0.60886 on Monday. The British pound dropped 0.4% to $1.24047, even as Trump hinted at a possible exclusion of Great Britain from the tariffs. The US dollar strengthened by 0.3% to 155.24 yen.
"The Chinese yuan fell by 0.3% to 7.3213 per dollar in offshore trading, recovering after a decline to 7.3765 yuan. The euro fell, as the European Union found itself at the center of Washington's trade attention. The euro dropped 0.4% to $1.0297, despite recovering from the lowest level since January 2022 - $1.0125 on Monday.
It's hard to reach an agreement between the US and China," stated Gary Ng, the chief economist at Natixis. Despite the fact that some issues might be unregulated, tariffs might remain a permanent instrument, increasing trade volatility this year. The potential damage from the increase in trade volatility, related to trade disruptions, indicates the need for continued monitoring of uncertainty in trade.
