DXY: US Dollar Up for Third Straight Day as FX Traders Brace for Tariff Onslaught

China is getting another 10% on imports and Mexico and Canada will be paying 25% starting March 4. What’s that mean for the buck?

💰 Dollar Rises Against Rivals

• The US dollar index DXY advanced across the board after forex bros flocked to the greenback seeking refuge amid a brutal stock selloff. The underlying theme — Donald Trump renewed his commitment to slap tariffs on America’s biggest trade partners.
• In this light, the gauge, measuring the dollar’s strength against six other currencies, was up for a third straight day on Friday, floating near 107.40, up by 1.3% over the time span.

🏷️ Canada, Mexico, China Tariff’d

• What happened? “We cannot allow this scourge to continue to harm the USA, and therefore, until it stops, or is seriously limited, the proposed TARIFFS scheduled to go into effect on MARCH FOURTH will, indeed, go into effect, as scheduled,” Trump said.
• More precisely, Canada and Mexico will be paying 25% on their imports into the US, starting Tuesday. The President doubled down on China with another 10% levy on top of the existing 10%.

📊 What’s the Interplay?

• Why did the dollar rise? Tariff hikes are bullish for the local currency as they make it more competitive out there and strengthen its positions domestically. But that holds certain risks as well.
• Among the risks are chances of elevated inflation pressures and a complicated path for the Federal Reserve and its anticipated cuts to interest rates. Against that backdrop, markets may not even see any more cuts to borrowing costs for 2025.