The dollar surged on Monday, pushing its Canadian counterpart and Mexican peso to multi-year lows while China’s yuan slumped to a record low in offshore trading after U.S. President Donald Trump kicked off a trade war by imposing sweeping tariffs.
The U.S. dollar’s gains were broad, with the euro also dropping to a more than two-year low and the Swiss franc – despite typically acting as a safe haven – sliding to the weakest since May.
Canada and Mexico, top two U.S. trading partners, immediately vowed retaliatory measures, and China said it would challenge Trump’s levies at the World Trade Organization.
“The surprise for markets … is that Canada and Mexico retaliated immediately and that others, i.e. China and the EU, may follow their lead, resulting in a sharp contraction in global trade,” said Tony Sycamore, a market analyst at IG.
“The starting date of U.S. tariffs on Canada, Mexico and China of Feb. 4 was also much sooner than many …