Currencies

In Canada, Prime Minister Justin Trudeau is increasingly likely to announce he intends to step down, though he has not made a final decision, a source told Reuters. The Globe and Mail earlier reported that Trudeau was expected to announce his resignation as early as Monday.

The Chinese yuan was among the worst performers in Asia, hitting its weakest level in nearly 16 months as a Financial Times report said the People’s Bank of China will cut interest rates further in 2025. 

The dollar remained upbeat, benefiting from expectations of a slower pace of rate cuts by the Federal Reserve in 2025, while protectionist policies under incoming President Donald Trump are also expected to favor the greenback.

Mexico’s peso weakened nearly 23% this year to close the final day of trading at 20.82 pesos per U.S. dollar on Tuesday, the currency’s deepest drop against the greenback since the 2008 global financial crisis.

Additionally, expectations of potential tariffs under the incoming Donald Trump administration have led to projections of higher inflation and robust economic performance, further boosting the dollar’s appeal.

Most Asian currencies weakened in recent sessions on the prospect of slower rate cuts in the U.S., while uncertainty over local monetary policy and slowing economic growth also weighed.

Asian currencies were nursing steep losses against the dollar from last week, although they trimmed some declines on Friday after the soft inflation data. The outlook for regional markets also remains clouded by uncertainty over U.S. interest rates and policy under incoming President Donald Trump. 

Most Asian currencies weakened on Friday with the Japanese yen recovering marginally from a five-month low as strong inflation data only partially offset a dovish outlook for the Bank of Japan.

The dollar flirted with a two-year peak on Thursday after the Federal Reserve signalled a slower pace of rate cuts in 2025, while the yen slid after the Bank of Japan (BOJ) stood pat on rates and offered few clues on its monetary outlook.

The U.S. dollar held firm on Wednesday as investors waited to see whether the Federal Reserve will deliver a hawkish cut ahead of other major central bank meetings this week, pushing the Australian and New Zealand dollars to fresh lows.