Global Markets React to Tariff Tensions and Dollar Decline

The dollar hit a three-month low amid fears of economic slowdown due to new tariffs by the U.S. on Canada, Mexico, and China. These tariffs spurred potential retaliation and economic concerns, prompting shifts in currency markets. Safe-haven currencies and global stock responses reflect market anxiety.

The U.S. dollar experienced a significant decline, reaching a three-month low on Tuesday, as traders expressed concerns over economic growth and the repercussions of tariffs imposed on Canada, Mexico, and China. President Trump's tariffs, which include a 25% levy on Canadian and Mexican goods and a 20% duty on Chinese imports, overshadowed any potential economic stimulus from these measures.

In response, China announced tariffs of 10-15% on certain U.S. imports effective March 10, while Canada confirmed its retaliatory tariffs would start Tuesday, with Mexico anticipated to follow. Market analysts, increasingly convinced of Trump's active trade policy, have begun to factor in a potential slowdown in both U.S. and global economic growth.

Amidst this backdrop, many investors turned to traditional safe-haven currencies like the Japanese yen and Swiss franc, reflecting market fears. The Federal Reserve's upcoming decisions, coupled with economic data such as the February nonfarm payrolls report, will be closely scrutinized. Meanwhile, market participants remain hopeful for a resolution to ongoing tariff tensions.

(With inputs from agencies.)