The global currency markets are bracing for possible changes as the deadline for US tariff increases on Canada and Mexico approaches. According to FX options signals, the Canadian dollar is expected to be damaged the most.
President Donald Trump has set Saturday as the deadline for placing 25% tariffs on imports from Mexico and Canada. This approach aims to put pressure on both countries to prevent illegal immigration and fentanyl from entering the United States. Trump announced on Thursday that he intends to impose these taxes, although it remains unclear if oil imports will be included.
Over the weekend, the Canadian dollar’s implied single-week volatility hit its highest level since October 2022. The volatility of the Mexican peso is at its greatest level since last November’s U.S. elections. Although the direction of this movement is not stated, the increased implied volatility indicates that traders are getting ready for a big change in the currency pair.
There are indications that the options market, which is commonly utilized by businesses and investors to manage risk, is becoming more uneasy in comparison to the spot currency markets.
Within minutes of Trump’s latest remarks, the dollar rose more than 1% vs the Canadian currency, hitting an almost five-year high of C$1.4596, before reversing course. It was trading at about 1.4484 in London on Friday. Instability has also affected the Mexican peso. It was trading at about 20.68 per dollar on Friday after falling more than 1% versus the US dollar on Thursday.
Its exports to the United States make up 83% of its total exports and contribute to 27% of its GDP. In addition, the peso has fallen more than 1% against the dollar at least seven times since Trump’s triumph in the presidential election last year. Against this fragile economic backdrop, opportunities like affiliate programs in prop firms emerge as a potential source of alternative income streams and risk management strategies in markets in flux.