Mexican peso surges after Trump calls tariffs on Mexico

TOKYO (Reuters) – The Mexican peso jumped against the dollar on Monday in Asia, after the United States and Mexico signed a migration deal late last week to avoid a tariff war. thus relieving the fragile climate of the market.

Over the past year, trade disputes between the United States and its trading partners, including a long-standing conflict with China, have slowed global growth and disrupted financial markets.

The Group of 20 finance chiefs said on Sunday that trade and geopolitical tensions have "intensified", which could hinder the improvement of global growth, without demanding a resolution of the trade dispute. which is intensifying between China and the United States.

The Mexican peso rose 2% against the dollar following the resumption of trade for the first time after Mexico agreed Friday to extend across the border a program that sends migrants looking for money. asylum in the United States in Mexico. The peso was up 1.65% to 19.30 pesos per dollar.

US President Donald Trump had threatened to impose 5% import duties on all Mexican goods as of Monday if Mexico did not further commit to tightening its borders.

"We all knew that Donald Trump was unpredictable, but it pushed him to a whole new level," said Chris Weston, head of research at Pepperstone, a currency broker.

"It was political, it was social. This meant that the financial markets had to carry a higher risk premium.

Against the safe yen, the dollar gained 0.2% to 108.425 yen.

The Japanese currency tends to take advantage of geopolitical or financial tensions, with Japan being the largest creditor country in the world.

Futures contracts for the S & P 500 were up nearly half a percent.

Nevertheless, dollar gains have been dampened by rising expectations, the Federal Reserve will reduce interest rates in the second half.

These views were reinforced on Friday when data showed that non-farm payrolls increased 75,000 jobs last month, well below the 185,000 additional jobs estimated by a Reuters survey, suggesting that the loss of business economic spread in the labor market.

Federal funds rate futures still expect more than two rate hikes of 25 basis points by the end of the year, even after their early withdrawal on Monday after the US-US migration agreement Mexico.

"The market says it's not a question of whether, but rather when and to what extent we are going to get a rate cut for this year," said Pepperstone's Weston.

Against a basket of six peers, the dollar rose 0.2% to 96.716, recovering slightly after a loss of 1.2% last week, its worst weekly performance since the week of February 16th of the year. last.

Elsewhere in the currency market, the euro edged down 0.1% to settle at 1.1388 dollars, down from the 11-week high of 1.1338 dollars reached on Friday. .

The Australian dollar was down $ 0.6995, yielding a portion of last week's gains as it rose 0.9%.

(Graph: Global exchange rates in 2019 – tmsnrt.rs/2egbfVh)