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Mexico’s peso and Canada’s dollar got a boost after United States President Donald Trump signalled the deadline for levies on goods from both countries would be pushed back, raising investor skepticism over one of the U.S. leader’s signature policies.
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The peso strengthened as much as 0.9 per cent against the U.S. dollar and the loonie briefly erased losses after Trump said tariffs on Mexico and Canada would go into effect on April 2, versus a previous deadline of early March. Later in the day, a White House official said the deadline remains March 4 and that Trump had not yet decided whether to grant another extension.
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“Trump is losing credibility,” said Marco Oviedo, a Sao Paulo-based strategist at XP Inc. “The market will probably start trading less the tariff story.”
The euro whipsawed after Trump said that tariffs on products imported from the European Union would be 25 per cent, trading just shy of the US$1.05 mark.
“By drawing out the uncertainty, firms are left with an uncertain outlook that will likely delay investment and hiring,” said Win Thin, global head of markets strategy at Brown Brothers Harriman. “A rolling one-month threat will just perpetuate this uncertainty.”
A gauge of implied volatility in the Canadian dollar over the next month has risen steadily over the last week, although it edged lower in Wednesday trading. The measure remains considerably higher than levels seen during the U.S. election.
The U.S. dollar, meanwhile, has whipsawed traders since Trump’s election. The Bloomberg Dollar Spot Index rallied more than four per cent between election day and the close of 2024 as investors bet that heavy tariffs under the new Trump administration would reignite inflation and drive up U.S. bond yields.
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That rally has gone into reverse this year, with the measure down nearly two per cent so far in 2025 after capping its worst three-week stretch since September. The Bloomberg dollar gauge traded little changed on Wednesday in choppy trade following the headlines.
—With assistance from Maria Elena Vizcaino.
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