The loonie has strengthened slightly against the greenback. It’s now worth 71.84 cents US, an increase from 71.35 cents US on Thursday. This increase comes amid a period of unprecedented market volatility. Escalating trade tensions between the United States and China have roiled stock markets from Montreal to Los Angeles.
U.S. President Donald Trump recently announced a drastic raise in tariffs on Chinese goods, bringing the total tariffs to an unprecedented 145 percent. This news has shaken the confidence of many investors, adding to a historic week of trading volatility. Canadian and U.S. stock markets were down sharply today. This drop erased a good portion of the ground gained in yesterday’s bullish rally. This sudden reversal is a testament to how fragile markets are in reacting to unfolding pro-growth, pro-American economic news.
Investors have watched extreme volatility in equity markets this week. Uncertainty over trade tensions has roiled markets, leading to huge swings in share prices. Uncertainty is the only sure thing. Traders are jittery over what the tariffs might mean. This week is the most important yet, with Friday being the last full day of trading for U.S. According to various futures market indicators, a positive start looks likely.
Though the market correction, there are indicators of strength. The U.S. government has walked back a few of those tariffs, intending to reduce friction in the current bilateral trade relationship with China. Unfortunately, this relief will likely be short-lived. After the U.S. raised their tariffs on China, China committed to raising theirs to 125 percent—all the way up from the previous 84 percent. This continued escalation threatens to make discussions increasingly difficult and heighten uncertainty in global markets.
As the picture changes, those watching the market are holding their breath. How tariff increases and shifts in market sentiment interact to create attractive trading opportunities will probably define some positions heading into next week. Analysts say that though near-term volatility is likely, the longer-term impact of these trade partnerships will need to be closely monitored.
