The Mexican Standoff

The peso fell as much as 1.4% against the dollar during Thursday’s U.S. session. Suggestions that the Trump administration might support a 20% tax on imports from countries with which the U.S. runs a trade deficit, such as Mexico, also affected the currency.

Raising the possibility of a tax is enough to undermine the peso, said Sean Callow, a foreign-exchange strategist at Westpac. “It looks like official relations between the two are at the lowest in many, many years.”

The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, was up 0.2% in recent Asian trading.

Pressure on the peso came amid renewed tension between the U.S. and Mexico. Mexican President Enrique Peña Nieto cancelled a meeting scheduled with Mr. Trump next week after tweets that Mexico would have to pay for the wall.

More than the wall, any 20% tax on Mexican imports would severely hurt its economy, said Stephen Innes, head trader for the Asia-Pacific region at forex broker Oanda.

THE WALL STREET JOURNAL

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Stephen Innes

Stephen Innes

Senior Currency Trader and Analyst at OANDA
Stephen has over 25 years of experience in the financial markets and specializes in Asian currencies at OANDA. After having started his trading career with NatWest Bank, he is currently based in Singapore as a Senior Currency Trader and Analyst with OANDA, focusing on the movement of the Aussie Dollar and ASEAN Currencies. Stephen has an extensive trading experience in Interest Rate Futures, Money Markets and Precious Metals. Prior to joining OANDA, he worked with organizations like Cambridge Mercantile, Nat West, Garvin Guy Butler, Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes