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.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes
Stephen Innes

Latest posts by Stephen Innes (see all)