In Singapore on January 21st, during a quiet trading period for the Canadian dollar, news broke that U.S. President Donald Trump was considering imposing a 25% tariff in just over a week. Instantly, the loonie, as the Canadian dollar is known in the foreign exchange market, dropped 200 pips against the U.S. dollar, creating an adrenaline rush on trading floors. This marked the start of intense trading activity.
Market analysts note that agility is key in this volatile environment and anticipate a shift in focus from Trump's statements to his actions, leading to more stable market reactions. Nick Twidale, chief market analyst at currency-focused broker ATFX Global in Sydney, remarked, "Smaller players will trade aggressively and swiftly to capitalize on these rapid changes."
Although Canada heavily relies on the U.S. for exports, the loonie quickly rebounded from a five-year low reached after Trump's announcement, allowing only quick-witted or early-positioned traders to profit.
Trump's unpredictable nature injects a unique volatility into financial markets, leaving traders guessing about the implications of his statements. Bart Wakabayashi, branch manager at State Street in Tokyo, mentioned, "We're definitely chasing headlines."
As traders eagerly awaited the reopening of U.S. equity markets after the inauguration day holiday, high trading volumes were reported at brokerage firms like Saxo and Moomoo. Michael McCarthy, chief commercial officer at Moomoo Australia, noted, "Traders thrive on volatility, seeing it as an opportunity to profit despite the increased risk involved."
Amidst the market frenzy, large investors like JPMorgan are strategizing to navigate Trump's announcements. Mary Erdoes, head of JPMorgan's asset and wealth division, revealed the establishment of a "war room" to address the issues arising from Trump's pronouncements, while strategists scout for long-term investment opportunities to withstand the short-term market fluctuations.
Tai Hui, JPMorgan Asset Management's chief strategist in Asia, highlighted that discussions around tariffs impact global supply chains, predicting a surge in demand for shipping and transportation.
Despite the uncertainty, traders closely monitor Trump's statements on his social media platform for any market-moving information.