(Bloomberg) — Canadian and Mexican currencies jumped on a report that President Donald Trump will delay implementing tariffs, providing some relief after a stretch of losses.
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The Canadian dollar rose as much as 0.8% and the peso strengthened the most in emerging markets against a weaker dollar after Reuters reported that the tariffs will take effect on March 1, a month later than anticipated.
“This delay implies the approach will be more nuanced,” said Christian Lawrence, cross asset strategist at Rabobank, adding that it suggest across-the-board 25% tariffs are unlikely. “Today’s headlines suggesting a delay have been welcomed with USD falling and CAD and MXN surging as a result.”
The Bloomberg Dollar Spot Index fell 0.1% following the report, reversing course after trading up as much as 0.4% earlier in the day.
The expectation that Trump would implement tariffs starting this weekend had been pushing the peso and Canadian dollar lower. Even after Friday’s jump, Mexico’s currency is down 1.1% this week while the loonie has lost 0.4% against the US dollar.
Canada’s currency is now headed for its longest monthly losing streak against the US dollar in over eight years.
“We’re getting to the point with the Canadian dollar where a lot of bad news is already priced in,”said Noel Dixon, a macro strategist at State Street. “From a risk-reward standpoint I’d start looking at shorting the US dollar versus the Canadian dollar.”
The Reuters report also suggested Washington will offer a process for countries to seek exemptions for certain imports.
“It seems there’s some willingness to negotiate and for exemptions — giving the two countries time to respond,” said Jayati Bharadwaj, a currency strategist at TD Securities.
–With assistance from Carter Johnson and Maria Elena Vizcaino.
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