Tokyo (awp/afp) – The dollar climbed on Tuesday in Asian trade, soaring against the Mexican peso and the Canadian dollar, while the stock markets were swaying, after Donald Trump's announcement of a massive increase in export duties. US customs targeting China, Mexico and Canada.
Peso and Canadian dollar under pressure
President-elect Donald Trump announced Monday evening that he would increase customs duties on Mexican and Canadian products to 25%, and increase those on Chinese products by 10% in addition to the taxes already in force or that he could add.
The announcement abruptly reversed the trend of the day before on the foreign exchange market.
The dollar thus stumbled heavily on Monday at the prospect of seeing the future Secretary of the Treasury, Scott Bessent – a veteran of Wall Street -, adopting more moderate and pragmatic trade policies. This hope quickly dissipated with Monday evening's statements in Washington.
The greenback logically rebounded, particularly against the currencies of the countries concerned: it soared by more than 1% against the Canadian dollar, to reach a four-year high, as well as against the Mexican peso, to levels more seen for two years. He then moderated his gains a little.
Around 06:30 GMT, one US dollar was trading at 1.4103 Canadian dollars (+0.84%) and 20.56 pesos (+1.37%).
Likewise, it rose against the common European currency, to 1.0477 euros per dollar. It climbed to 154.05 yen, before the Japanese currency reversed the trend and managed to resist.
Mr. Trump's announcements sound like “a return to the intransigent doctrine of 'America First' which brutally excludes even its closest allies”, reacts Stephen Innes, analyst at SPI Asset Management.
“The reaction to the appointment of Bessent could have been only a fleeting parenthesis, the market is once again focusing its attention on the customs taxes expected at the beginning of 2025” and on the “inflationary policies” promised by Mr. Trump, underline the experts from MUFG.
Vast tax cuts, increased customs duties, expulsions of migrants… all measures likely to fuel high inflation, and therefore keep the interest rates of the American central bank and American bond yields high. , favoring investments in dollars.
The specter of trade tensions weighs on Tokyo
In unison with the markets of Sydney, Seoul and Bombay, the Tokyo Stock Exchange stumbled on Tuesday: the flagship Nikkei index closed down 0.87% at 38,442.00 points and the broader Topix index by 0.96% to 2689.55 points.
The US president-elect's customs threats “caused an attack of risk aversion among investors”, encouraging them to move away from the stock markets, noted experts from the broker IwaiCosmo.
Although these customs tax increases do not target Japan, “they fuel doubt about their possible application also in Japan,” continued the IwaiCosmo experts.
In this context, the automobile manufacturer Toyota, which has factories in Mexico, was battered (-1.00%).
Securities linked to semiconductors tumbled again, like Tokyo Electron (-2.09%) and Advantest (-4.31%), in the wake of repeated poor performances on Wall Street from American champion of Nvidia chips.
Chinese squares are rounded
The Chinese stock markets hardly reacted on Tuesday, standing still in Hong Kong as in Shanghai, the threat of an increase in American customs duties having already been largely taken into account by investors.
“The magnitude of the announced increase is crucial: any figure lower than the 60% increase (which Donald Trump initially promised for Chinese products) must be seen as good news,” says Ken Wong, expert at Eastspring Investments, quoted by Bloomberg .
Around 06:30 GMT, in Hong Kong, the Hang Seng index rose 0.09% to 19,167.35 points. The Shanghai composite index rose 0.12% to 3,268.13 points, and that of Shenzhen lost 0.56% to 1,963.75 points.
The internet giant Baidu, however, shone in Hong Kong (+5.01%), after press reports reporting the upcoming deployment of its Apollo Go driverless taxi fleet in Hong Kong.
Slight oil gains
Geopolitical volatility continues to drive oil prices, despite reports that a ceasefire could be near in Lebanon, which briefly weighed on the oil market.
Around 06:30 GMT, the price of a barrel of Brent from the North Sea rose 0.23% to $73.18, and that of West Texas Intermediate (WTI) rose 0.20% to $69.08.
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