A sharp rebound in the US dollar followed a statement from President-elect Donald Trump that he is "mulling a national emergency declaration" to allow for his proposed tariff increases.
CNN first reported the news, citing sources familiar to the incoming White House administration, where the International Economic Emergency Powers Act would be used to enable the president to manage imports during a national emergency.
"Nothing is off the table," a source familiar with the matter told CNN.
Traders are finding in recent days they again need to pay close attention to everything that emerges from Trump, said market analyst David Morrison at Trade Nation.
In currency markets, a rise in the USD has sent the GB pound almost 1.1% lower to 1.234, the lowest since last April, while the DXY dollar index is at the highest levels since October 2022.
Financial markets, especially US equities, have been "skittish" so far this year, says Morrison.
"This is fairly typical when markets trade near extremes, whether around all-time highs or after significant sell-offs," he says.
"Market participants become aware that the path of least resistance is no longer as obvious as it was before. This leads to overreactions to otherwise minor events and announcements, exactly as seen over the last two trading sessions."