(Bloomberg) -- The dollar jumped after the White House said US tariffs will start Saturday as planned, adding to a volatile day that has seen currencies whipsawed by reports on one of President Donald Trump’s signature policies.
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The Bloomberg Dollar Spot Index rose as much as 0.4% to a session high, reversing course after trading lower when Reuters reported that implementation would be delayed by a month. The White House denied that report and said it will go ahead with the 25% tariffs against Mexico and Canada as well as a 10% levy on China.
“It’s a pretty fluid situation,” said Alejandro Cuadrado, head of global FX and Latin America strategy at Banco Bilbao Vizcaya Argentaria SA in New York. “The point of using tariffs as a negotiation tool has an embedded volatility component on it.”
Washington’s announcement wiped out earlier gains for the Mexican peso and Canadian dollar, which have been repeatedly pushed lower as Trump’s plan for tariffs crystallized.
Mexico’s currency is down 2% this week while the loonie has lost 1.1% and is now headed for its longest monthly losing streak against the US dollar in over eight years.
“We’re getting to the point with the Canadian dollar where a lot of bad news is already priced in,” said Noel Dixon, a macro strategist at State Street. “From a risk-reward standpoint I’d start looking at shorting the US dollar versus the Canadian dollar.”
Valerie Ho, a portfolio manager at DoubleLine Capital in Los Angeles, said volatility is likely to continue plaguing the Mexican peso in the short term.
“The worst case is that tariffs are going to be multilayer and prolonged to come out,” she said. “It’s a tough environment.”
--With assistance from Carter Johnson and Michael O'Boyle.
(Recasts with White House tariffs announcement.)
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