Trump’s back, so is uncertainty Via Reuters

A look at the future of European and global markets from Kevin Buckland

Everything investors feared about another Donald Trump presidency was proven true in the first hours of the first day, and investors in particular were they were left with a case of whiplash.

The lack of tariff threats in Trump’s inauguration speech was seen as a green light to sell the dollar. Hours later the new president of the United States was surprised by plans for tariffs of 25% in Canada and Mexico from Feb. 1. The peso depreciated.

The moves reflect the uncertainty that has plagued Trump’s first term as Commander-in-Chief, and markets need to remain vigilant. But as it was then, Trump’s salvo could turn into a negotiating strategy.

Trump has always said he is a salesman and investors may be encouraged by his comments on TikTok and China that looked like an invitation to the table, and came with a warning of tariffs if Beijing tries to block the deal.

For the EU too, Trump said tariffs are the only way to “stretch” the trade deficit. One would be greater sales of US oil and gas.

Despite these comments, Trump backed away from a universal tariff, saying “we’re not ready for that”.

Funds have been in yo-yo swings for the past few hours. However, from the afternoon in Asia, the American dollar was against the basket of its biggest rivals, although not as strong as it was early Tuesday.

China’s central bank has protected the yuan by imposing a strong correction since early November. However, given China’s continued focus on Trump’s tariff warnings, analysts say the long-term momentum looks tough.

The euro and sterling were down about 0.3% each, while the yen strengthened. The Japanese currency was boosted by bets for policy tightening by the Bank of Japan on Friday, despite some concerns about the impact of any US tariffs on the auto industry.

Meanwhile, Trump’s meme coin has risen to more than $10 billion in market value, helping to boost other cryptocurrencies along with it. That included bitcoin, which pushed to a new all-time high above $109,000, although it was back below $102,000 in recent activity.

In the European economic calendar today, Britain releases jobs data and Germany has the ZEW opinion poll.

EU finance ministers are meeting in Brussels to discuss how to improve competition.

ECB Vice President Luis de Guindos joins the ECOFIN meeting, also in the Belgian capital.

No Fed speakers are scheduled this week, and officials are in a shutdown period ahead of next week’s policy meeting.

Key developments that could impact markets on Tuesday:

– UK Rates (Dec)

– German Research ZEW (Jan)

– Canadian CPI (Dec)