Dollar rebounds sharply, futures rise as Trump 2.0 jolts markets

By Rae Wee and Harry Robertson

SINGAPORE/LONDON (Reuters) -The dollar rebounded sharply connected Tuesday aft plunging hours earlier arsenic Donald Trump's archetypal time backmost successful the U.S. presidency brought mixed messaging connected tariffs and highlighted investors' sensitivity to headlines astir commercialized policy.

U.S. banal futures roseate aft bouncing astir connected Monday arsenic traders digested Trump's statements connected economical argumentation and commercialized levies, portion European equities eked retired tiny gains.

The Mexican peso and Canadian dollar tumbled connected Monday nighttime - reversing crisp gains from earlier successful the time - aft Trump said helium was mulling imposing 25% tariffs connected the neighbouring countries arsenic soon arsenic Feb. 1.

That sent the Mexican peso sliding 1.3% against the U.S. dollar portion the Canadian dollar tumbled to a five-year debased of $0.689.

Around 11 hours earlier the U.S. dollar had plunged against its peers aft a statesmanlike memo, archetypal reported by the Wall Street Journal, said the medication would probe commercialized issues but halt abbreviated of day-one tariffs.

The , which measures the currency against six peers, was past up 0.64% astatine 108.69 connected Tuesday, though failed to marque backmost the 1.2% it mislaid connected Monday successful its biggest regular autumn since November 2023.

"The archetypal fewer hours of the Trump medication person underscored that the argumentation situation volition beryllium dynamic erstwhile again and markets should brace for volatility," said Charu Chanana, Saxo's main concern strategist.

"Clearly, the markets celebrated excessively soon with tariff threats missing astatine the outset successful Trump's inaugural speech."

The euro was past down 0.62% astatine $1.2248, aft rallying 1.4% connected Monday amid the alleviation astir a hold successful tariffs. Sterling was 0.67% little aft jumping 1.3% the erstwhile day.

Trump besides said helium wanted to reverse the U.S. commercialized shortage with the European Union, either with tariffs oregon much vigor exports.

Europe's continent-wide scale was 0.16% higher but was down 0.1%.

U.S. banal futures rallied aft struggling successful aboriginal trading, leaving Nasdaq futures 0.56% higher and up 0.49%.

European carmakers slipped astir 0.4% connected Tuesday aft Trump revoked a 2021 enforcement bid signed by his predecessor that sought to guarantee fractional of each caller vehicles sold successful the United States by 2030 were electric.

TRUMP TEMPEST

The dollar has risen astir 5% since Trump won the Nov. 5 election, partially due to the fact that the U.S. system has remained beardown and partially arsenic investors person braced for wide-ranging tariffs that would apt wounded America's trading partners.

Many investors had expected aboriginal enactment connected tariffs, hence the large moves sparked by the memo indicating nary contiguous action.

U.S. Treasury yields were down 4 ground points connected Tuesday astatine 4.57%, aft reopening for trading aft a nationalist holiday.

The yields, which acceptable the code for borrowing costs astir the world, are nevertheless up astir a percent constituent since the Federal Reserve slashed rates by 50 bps successful September, reflecting an system that has continued to turn strongly.

Chinese stocks were volatile but ended higher arsenic Trump mostly steered wide of definitive threats against the country's exports, with the CSI 300 scale up 0.1%.

Trump warned helium could enforce tariffs connected China if Beijing failed to o.k. a U.S. woody to beryllium a half-owner of short-video app TikTok.

"At immoderate point, we are rather definite that Trump volition commencement to determination connected the tariff measures," Khoon Goh, caput of Asia probe astatine ANZ, said of tariffs much broadly.

"The information that helium hasn't addressed this connected time 1 doesn't mean that it is disconnected the agenda. It is decidedly firmly connected the agenda, it's conscionable that we person to hold and spot what signifier oregon signifier helium takes."

Elsewhere, Trump's caller crypto token gave up immoderate of its beardown gains connected Tuesday to autumn 20% to $35.27, aft having soared to much than $10 cardinal successful marketplace worth astatine the commencement of the week.