The risky market sentiment at the opening of the week began to ease again following the latest developments regarding the tariff war situation triggered by United States (US) President Donald Trump.
Over the weekend, Trump announced tariffs on imported goods on Canada, Mexico and China. Without wasting time, Canadian Prime Minister Justin Trudeau immediately announced a 25% tariff retaliation to the US as well.
Following that, Trump took the approach to discuss with Canada, which then agreed to temporarily postpone the implementation of tariffs on Canadian imported goods for 30 days.
Following the change in current market sentiment, the US dollar, which strengthened at the opening of the Asian session yesterday, was again traded lower in the European and New York sessions.
Although the US ISM manufacturing PMI data for January recorded excellent readings exceeding the 50 point level, it failed to support the strengthening of the US dollar.
The Canadian dollar, which fell to its lowest level in almost 20 years, recovered with a daily plunge of 400 pips displayed on the USD/CAD currency pair chart yesterday.
However, market analysts are still warning investors to be cautious as the tariff war situation is set to heat up again.
The Eurozone is also facing threats as Trump is considering imposing a 10% tariff.
This will add further pressure, especially on the Euro currency after the European Central Bank (ECB) also last week cut interest rates by 25 basis points.
The Federal Reserve (Fed) is still keeping interest rates unchanged as expected and the market will examine new indicators this week through the NFP employment report on Friday.
