The United States has moved forward with previously delayed tariffs on Canada and Mexico, while China faces a second 10% tariff increase in just two months. The US dollar is showing mixed performance, with the Swiss franc and Japanese yen leading the G10 currencies. Both Canada and China have announced initial, modest retaliatory measures, while Mexico is expected to act soon. Stock markets are under pressure due to the tariffs, with most Asian markets falling and European indices, including the Stoxx 600, showing significant declines. The gold market is recovering after its first weekly loss of the year, and oil prices are retreating against the backdrop of OPEC+ confirming an increase in output.

Asia Pacific Markets

In Asia Pacific, the Japanese yen has faced pressure, with the US dollar rising to nearly JPY151.30 before retreating, influenced by a drop in US Treasury yields. The yen's weakness prompted a response from Prime Minister Ishiba, denying allegations that Japan sought trade advantages through currency manipulation. Meanwhile, the Chinese yuan has shown resilience despite the tariff announcements. The dollar initially surged against the yuan but reversed course, trading near a three-day low. China's National People's Congress is set to begin soon, as the relationship with the US continues to evolve amidst the ongoing trade tensions.

European Markets

In Europe, the euro has bounced back from recent lows, briefly surpassing the $1.05 mark. Despite some signs of weakening momentum, the euro’s performance is bolstered by a narrowing interest rate differential between the US and Germany. Eurostat reported stable unemployment rates in the Eurozone, maintaining a record low of 6.2%.
The British pound has also seen positive movement, recovering fully from earlier losses to reach its highest level since mid-December. The pound is trading near important retracement levels, as investors await the latest economic data, including PMI figures and new car registrations.

American Markets

The US dollar has faced volatility following its rally last week, influenced by tariff concerns. The Dollar Index has broken key support levels, slipping below 106.00, while the dollar shows mixed performance across different currencies. With tariffs on Canada, Mexico, and China now in effect, market attention is shifting towards the President's upcoming State of the Union address. The US bond market is also reacting, with Treasury yields edging up slightly. The economic calendar remains light, though the Federal Reserve’s policy trajectory remains a key focus for currency and bond market participants.