- US Treasury Secretary Mnuchin: we are close to a deal with Mexico and Canada tariffs.
- Mexican peso soars after Mnuchin comments, the biggest gainer among most-traded currencies.
The USD/MXN dropped sharply from the highest level since last Thursday to the lowest in a week and to the 19.00 area. Earlier today, the pair rose to 19.25 but then slide dramatically following US Treasury Secretary comments.
According to the Wall Street Journal, Mnuchin signaled they are close to an understanding with Mexico and Canada on resolving steel and aluminum tariffs. Mexican officials are expected to announce retaliatory measures in two weeks. The last report point to easing tensions that boosted the Mexican peso and also the Canadian dollar. Also, the WSJ, said Mnuchin will travel soon to China to continue with negotiations, adding to the recent improvement in market sentiment.
Market participants mostly ignored US data released today. In Mexico, the key event of the week will be the Banxico meeting tomorrow. No change in rates is expected.
USD/MXN Levels To watch
The Mexican peso is the top performer today. The USD/MXN appeared to be ready to reinforce the bullish momentum before reversing. During the slide, the pair broke the 19.10 support (now immediate resistance) and bottomed at 19.00. The area around 19.00 is the closest barrier and a break lower would clear the way for a test of 18.90, the support that protects the YTD low at 18.73.