The Impact of Tariffs on Currency and Precious Metals Markets
February 10, 2025
The US's talk of tariffs has added volatility to the currency and precious metals markets. While factors like key interest rate decisions, job reports, and housing market reports can cause volatility, introducing trade policy changes or removing long-standing collaborative trade agreements brings a new dimension to global financial market changes.
The tariff impact on the economy and market access to the US has wide implications for our corporate clients who are net sellers of USD since they face additional concern about their ability to continue selling products and services into the US if tariffs create trade barriers.
Current Market Concerns
We asked our VBCE Traders what their customers were concerned about and what strategies they offer clients in times of uncertainty. Are there any concrete examples of what could be done during the market’s ups and downs amidst daily news cycles introducing changes to trade policies?
I have been receiving more requests from clients for quotes of USD to CAD and have, on average, been seeing larger volumes of exchange, particularly early in February….As news and developments seem to come out at different times of the day these past couple of weeks, we’re bracing for big market movements at any second - Garo Mavyan – VBCE Trader
There are always two sides to exchanges: buying and selling, and your position depends on your needs and the currency you want. Customers had similar concerns for market volatility, but navigating the more significant swings and fast pace we saw as Trump suddenly announced Canadian tariffs and then delayed them escalated conversations on timing for exchanges, including:
- When buying USD, how would a business or individual approach quick changes in foreign currency and precious metal rates when decisions need to be made for property purchases, paying US vendors or bills, and purchasing supplies internationally?
- When selling USD, what works best to receive the best value when receiving payments in USD? Or when USD investments are maturing?
- Precious metals like gold work similarly in the buy and sell position. You can either purchase or sell gold. Since we manage both transactions, what should customers expect? Hold, sell or buy?
Market Volatility Strategies
We asked our traders to share risk management and strategic planning options for FX and Precious Metal services that help clients navigate market uncertainty; here are the top three strategies:
- Hedging Against Volatility: Clients can use market orders and forward contracts to reduce currency risk and secure favourable exchange rates.
- Cost-Averaging Strategies: By spreading transactions over time, clients can mitigate the impact of sudden price swings in FX and precious metals.
- Expert Guidance in Unpredictable Markets: While traders cannot predict future rates, their in-house tools and insights help clients make more informed financial decisions.
February 3rd, U.S. officials confirmed what we’ve believed all along – the tariffs are not about trade but a negotiating tactic to shore up border defences…The rate has since fallen as Canada and Mexico tariffs have paused for a month. I suspect the USD strength we’ve seen over the past two months will continue to unwind… – Steve Brown – VBCE Trader
In times of uncertainty, having someone watch the markets for you and work with you to explore the options is key. Our traders have been on the phone with clients and answering emails to help clients navigate timing and options. If you have any concerns you would like to discuss, speak to one of our traders. They would be happy to connect with you and share how the market is reacting and what options are available for individuals and businesses.Call, email or visit one of our four locations today.