US dollar continues to give back gains. Euro now positive

There are mixed indications in the market around the threat of tariffs. The US dollar jumped earlier in the day after Trump floated tariffs once again but the moves have slowly faded and the euro is now higher on the day.

Even the loonie, which was singled out for tariffs is now down only modestly and has climbed 100 pips from the lows.

The moves signal that the market still believes that Trump isn’t gearing up for a trade war. However the picture isn’t entirely consistent across markets as Chinese equities have softened through the day.

I tend to think there are some heavy options and hedges in play around inauguration that could be driving market moves.

This article was written by Adam Button at www.forexlive.com.