Traders saddle up for Trump 2.0

By Tom Westbrook

SINGAPORE (Reuters) – The headline hit screens at the quietest time of day for trading Canadian dollars: U.S. President Donald Trump was thinking about imposing a 25% tariff on Canadian goods in just over a week’s time.

Within seconds the – the foreign exchange market’s nickname for the Canadian dollar after the loon bird depicted on one dollar coins – gave up 200 pips against its U.S. counterpart, sending a familiar adrenaline jolt across trading floors. The white-knuckle business of trading Trump had begun again.

Brokers say it’s an environment that rewards the nimble and encourages trading, although they expect markets to eventually shift focus to what Trump does and not move so wildly on what he says.

“Smaller players will trade hard and fast and try to jump on the back of these moves very quickly,” said Nick Twidale, chief market analyst at currency-focused broker ATFX Global in Sydney.

Although Canada sends 75% of its goods and services exports to the United States, the move in the loonie was soon over with the currency pulling back from the five-year low hit in Asian trading moments after Trump’s remarks.

That meant only the fastest, or those positioned early, made money.

“It’s difficult to trade,” said Twidale. “But there’s opportunities out there. I think we’ll see high levels of volatility…Trump 2.0 is trading very much like Trump 1.0.”

Trump, who told reporters he was thinking of imposing tariffs on Canada and Mexico from Feb. 1, tends to inject a unique volatility into financial markets with his stream-of-consciousness delivery keeping traders guessing.

“You could look at this any which way, right? Is February 1 the open question, or is it the tariffs themselves,” said Bart Wakabayashi, branch manager at State Street (NYSE:) in Tokyo.

“We’re definitely headline chasing.”

Twidale and dealers at brokerage Saxo and online trading firm Moomoo reported strong volumes as clients logged on to trade through Trump’s first afternoon in office. An even bigger surge is expected on Tuesday when U.S. equity markets re-open after the inauguration day holiday.

“Traders love volatility,” said Michael McCarthy, chief commercial officer at Moomoo Australia.

“It comes at greater risk, but it means there’s greater opportunity for them to make money out of the market.”

Big investors are also scrambling to chart a course.

Speaking at Davos, JPMorgan’s asset and wealth head Mary Erdoes said that the bank has a “war room” to address the slew of executive orders issued by Trump on Monday, while strategists look for long-term buys that can ride out the short-term rollercoaster.

“If we take a step back and look at what’s enveloping this whole discussion on tariffs, it’s about global supply chains,” said Tai Hui, JPMorgan Asset Management’s chief strategist in Asia. “You can imagine demand for shipping and transportation will rise.”

Still, most traders have the Trump-owned Truth Social feeds close to hand, to catch his every word.