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The money market is increasingly dismissing about Donald Trump’s tariff threat, which would increase the risk of substantial volatility if the U.S. president follows his promise to attack China, Canada and Mexico with Levies next week.
Trump’s proposal to levy the EU and China has disturbed the euro and currencies of other U.S. trading partners. But the Falls are less dramatic than some of the turmoil seen in recent weeks when they began to shed light on their plans.
Measures for expected short-term fluctuations in currencies such as the euro and Mexican peso, such as the euro and Mexican peso, have declined since taking office in January.
“It has been burned down by tariff transactions this year, and investors have reacted less to unsupported tweets,” said Jerry Minier, co-head of Barclays G10 Forex trading.
Exchange rate headlines have been burned by tariff headlines, with the dollar sharply strengthening currencies targeting major trading partners after Trump announced tariffs on Mexico, Canada and China. But the move was reversed before the end of the trading day after the president postponed the introduction of levies to the first two countries.
Since then, the market has moved less in response to his announcement. The euro stabilized on Friday after falling after a wide-side fall on Friday, while in early February, well below the low of $1.02 to $1.02.
Akshay, global head of short-term interest rate trading at Citigroup, said money markets “want to see them acting” when “trust and believe” in tariffs.
He added: “I used to be ‘I believe what you told me’, now it’s ‘to show me.
According to the CME Group index, investors’ expectations for the euro-dollar volatility next month have fallen by about one-fifth from their peak in mid-January.
Its expected volatility index has also fallen since January – now almost half its level in the U.S. election – and the same measure for the Canadian dollar has also fallen from its peak in early February. Despite imminent deadlines, such as Mexico and Canada tariffs will enter next week.
“Our model shows that tariff discounts have been unraveled in recent weeks and now there are few prices [currency pairs]Goldman Sachs said in a note Friday.
A currency trader at a large European bank said the weekdays in recent weeks have become “weird speed”.
“Trump will shout some tariffs, retreat from these announcements, the White House will say completely contradictory things, and then Trump may post to “Social Truth” in 10 minutes,” the trader said. “You can’t trade.”
Analysts say this inertia has also gradually entered the interest rate market, and at the end of last year, people were worried that promoting inflation from tariffs would increase higher yields.
ICE BOFA MOVE INDEX is far below the highest point of the U.S. election advancement, according to bond investors’ expectations for volatility in the U.S. treasury market.
“Given that the market is now very clear, you would think that volatility will be higher, but the market becomes numb until [investors] Actually, see the way forward.
But, according to Barclays’ smaller ones, the risk of the market stopping the potential economic consequences of tariffs is growing, and “complacency” is now a danger now, according to smaller ones at Barclays.
Some believe that expectations for lower volatility will make the sell-off even bigger if a large amount of trade taxes are eventually implemented.
Trump “really follow [on blanket tariffs]Finn Nobay, a businessman at investment firm Payden & Rygel, said there will be a knee reaction because most people think it is not priced. ”
