The tariffs shock waves are hitting the currency market as expected. The dollar is surging, and the Euro, Mexican Peso and Canadian dollar are weakening, to the tune of 2% in the last 24 hours. Crypto currencies are also suffering. As you can see in the chart below, Ether is down 38% from its peak, and Bitcoin 14% from its recent highs. International trade needs to find a new point of equilibrium, before something brakes. These shocks have unintended consequences that will unravel over the next few days, and we’ll see if the equity markets can take the punch. Futures are down 1.5% on average, as retaliations are coming in. Currency devaluations are a way to fight tariffs but may bring inflation back. The EU published today both the Core CPI and CPI and both where higher than expected by 0.1%. The risk of stagflation is increasing.
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