Dollar Surges After Trump's Tariff Announcement

The U.S. dollar strengthened significantly against major currencies following President-elect Donald Trump's announcement of a 25% tariff on imports from Mexico and Canada, leading to a 2% rise against the Mexican peso and 1% against the Canadian dollar. This move has created market volatility, with Asian shares falling amid concerns over Trump's trade policies and the impact on U.S. inflation. The Indian Rupee (INR) faced selling pressure as the dollar's demand surged, despite potential support from MSCI index rebalancing and declining U.S. bond yields that could help the INR recover in the near term. Traders are also closely monitoring upcoming economic indicators and the Federal Reserve's stance on interest rates, with expectations for a potential rate cut in December. Scott Bessent's nomination as Treasury Secretary initially buoyed markets but has since led to mixed reactions due to his support for a strong dollar and tariffs. Analysts suggest that ongoing economic uncertainty could temper expectations for market performance moving forward.