Dollar Drops Most in Two Months as Trump Reportedly Plans Tariff Limit

The US Dollar Index (DXY) fell by the most in two months on Tuesday, following a report that President-elect Donald Trump plans to limit tariffs on imports. The DXY dropped 0.7% to 106.80, its lowest level since October 2023. The decline was driven by a weaker Canadian Dollar (CAD), Mexican Peso (MXN), and Chinese Yuan (CNY), as markets reacted to the news.



The report, published by Bloomberg, stated that Trump is considering limiting tariffs on imports from Mexico and Canada to 25% until those countries satisfactorily stop illegal immigration and the flow of illegal drugs such as fentanyl into the United States. Additionally, Trump is reportedly planning to impose an additional 10% tariff on Chinese goods to combat the production of materials used in making fentanyl.

The potential limit on tariffs has sparked optimism among investors, as it suggests a more moderate approach to trade policy under Trump's second term. However, some analysts remain cautious, noting that the details of the proposed tariff limits are still uncertain.



The US economic calendar will show some housing data on Tuesday, with the Housing Price Index for September and the New Home Sales data for October. These releases could provide insights into the health of the US housing market and its potential impact on inflation. Additionally, the Federal Reserve (Fed) will publish the Minutes of its November 7 meeting, which could offer clues about the central bank's future policy decisions.

In conclusion, the US Dollar Index (DXY) fell by the most in two months on Tuesday, following a report that President-elect Donald Trump plans to limit tariffs on imports. The decline was driven by a weaker Canadian Dollar (CAD), Mexican Peso (MXN), and Chinese Yuan (CNY), as markets reacted to the news. The potential limit on tariffs has sparked optimism among investors, but analysts remain cautious due to the uncertainty surrounding the details of the proposed tariff limits. The US economic calendar will show some housing data on Tuesday, which could provide insights into the health of the US housing market and its potential impact on inflation. The Fed's Minutes of its November 7 meeting could also offer clues about the central bank's future policy decisions.