The Mexican peso surged on Monday, benefiting from news the U.S. won’t impose trade tariffs after a deal was reached between the two nations.
Mexico’s peso jumped 2.2% against the dollar. The buck was buying 19.198 pesos, compared with 19.624 pesos late in North American trade Friday. The peso tapped session highs not seen since late 2018.
But elsewhere, a gauge of the dollar, the ICE U.S. Dollar Index climbed 0.35% at 96.887. The dollar notably climbed against the Japanese yen up 0.5% to 108.67 yen from 108.19 yen late Friday. Considered a haven asset, the yen fell as upbeat trade news drove gains for global assets, with U.S. stock futures pointing to a stronger Wall Street open.
The euro fell 0.3% against the dollar to $1.1296 from $1.1335 late Friday.
Late Friday, President Donald Trump tweeted that he had suspended plans to impose tariffs on Mexico after reaching a deal with that country over stemming the flow of illegal immigration. But he warned Mexico in a series of tweets on Sunday that if cooperation should fail, “we can always go back to our previous, very profitable, position of tariffs.”
The Group of 20 finance leaders on Sunday vowed to protect global growth from disruptions such as trade tensions.
“The lessening of US/Mexican tension clearly helps the mood somewhat, and obviously helps the peso, but the US/Chinese trade conflict has much wider implications,” Kit Juckes, global macro strategist at Société Générale, told clients in a note, adding that it will be tough to see a sustained turn in the dollar “while uncertainty about Chinese FX policy persists.”
“Or, to be simplistic about it, I don’t think EUR/USD is going to make a major move higher while USD/CNH is edging steadily higher,” said Juckes.
The offshore Chinese yuan fell to a fresh 2019 low against the dollar on Monday, changing hands at 6.9558 to the dollar, according to FactSet. That was as data Monday showed that China export growth saw a small rebound in May, though imports fell sharply. A weaker yuan makes Chinese more competitive across global markets.
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