At Any Rate
Global FX: What to expect when you are expecting inauguration
Jan 17, 2025
This discussion features Junya Tanase, a Global FX Strategy Analyst at J.P. Morgan, known for his insights on the Bank of Japan's monetary policy, and James Nelligan, who specializes in the British pound and Norges Bank analysis. They delve into the FX outlook as the U.S. Presidential inauguration approaches, examining the potential dollar fluctuations and tariff impacts. Junya anticipates a rate hike from the BOJ, while James evaluates the struggles of the British pound amidst economic challenges and trade tensions affecting the UK and Norway.
25:31
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Quick takeaways
- The potential implementation of tariffs, particularly a 25% tariff on Canada, could substantially impact dollar valuations and escalate dollar-CAD exchange rates.
- Ongoing global tariff discussions are likely to influence monetary policy decisions worldwide, affecting currencies such as the British pound and the yen amidst trade uncertainty.
Deep dives
Impact of Tariffs on the Dollar and FX Markets
The potential implementation of tariffs is expected to significantly influence dollar valuations and foreign exchange markets. Previous analyses indicate that a universal increase of around 10% in tariffs has already been factored into the dollar's price, but upcoming announcements may push this further. Speculation exists around whether tariffs will be broad or targeted, with possible implications for the Canadian economy given its heavy reliance on U.S. trade. Depending on the scale of these tariffs, there could be substantial repercussions for the dollar, particularly if a 25% tariff on Canada is implemented, which may lead to a potential recession in Canada and a sharp increase in dollar-CAD exchange rates.
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