The dollar rises despite the postponement of tariffs for Canada and Mexico
The US dollar index rose during trading on Tuesday, reaching the level of 109, with the entry into force of new US tariffs of 10% on Chinese imports, this step is seen as the beginning of a trade war between the two largest economies in the world, which may lead to large-scale economic consequences.
China immediately responded by imposing similar tariffs on a range of US exports, including oil, gas, coal, cars and agricultural equipment, which will come into force from February 10, this escalation of trade tensions has raised global markets ' fears of negative effects on economic growth and inflation rates, increasing uncertainty about the future monetary policy of the US Federal Reserve.
US President Donald Trump also agreed on Monday to temporarily suspend the planned tariffs imposed on Mexico and Canada, after successful negotiations with the leaders of the two countries.
This decision comes as part of the US efforts to renegotiate free trade agreements with its two northern neighbors.
Unlike Canada and Mexico, it is clear that it is difficult for the United States and China to agree on what Trump is demanding economically and politically.
On the currency front, the US dollar witnessed a significant rise against other currencies, especially the Australian dollar and the New Zealand dollar, as Australia and New Zealand are trading partners of China, which has already started implementing US tariffs, and this reflects the uncertainty prevailing in the markets with the escalation of trade tensions between Washington and Beijing.
The Canadian dollar and the Mexican peso also weakened despite having a month's notice before the implementation of these US tariffs of their own.
The euro also fell, as the European Union found itself in the crosshairs of Washington's trade fire.
On the other hand, traders and investors are turning their attention to the non-farm payrolls report due to be released next Friday, which is expected to provide important insights into the health of the US labor market, a key factor in determining the directions of the Federal Reserve's monetary policy.
