Markets in Australia and Japan were positive in early trade after Japan’s inflation data showed improvements and markets stateside clocked new record highs, even as threats of a trade war with Mexico brew.
A social media war of words between Mexican President Enrique Pena Nieto led to a canceled meeting with U.S. President Donald Trump over a border wall and trade relations hit the Mexican peso overnight.
During the Asian session, the peso fell more than 0.5 percent against the greenback at 21.33 after the White House said it might impose a 20 percent tax on goods from Mexico to pay for the wall along the U.S. southern border. The lowest for the peso was when it reached 22.0385 to the dollar on Jan. 11.
“Regionally, it is hard to divorce ourselves from the Mexico storyline. How that plays out could have far-reaching ramifications locally,” said Stephen Innes, senior trade at Oanda, in a note on Friday.
Innes added that “when politics becomes the primary driver behind currency markets, expect confusion to reign.”
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