Yahoo Finance Mexican Peso Jumps 2% on Deal to Avoid U.S. Tariffs
Investing.com - The Mexican peso jumped 2% against the U.S. dollar after the U.S. and Mexico agreed on a migration deal to avoid tariffs on Mexican goods.
The USD/MXN pair was down 2.0% to 19.2234 by 11:42 PM ET (03:42 GMT) following the reports. U.S. President Donald Trump had previously said he would impose 5% import tariffs on all Mexican goods if Mexico failed to tighten its borders.
The safe-haven yen fell 0.3% against the dollar to 108.50. The currency usually benefits during geopolitical or financial stress.
Meanwhile, the U.S. dollar index that tracks the greenback against a basket of other currencies rose 0.3% to 96.730. The index was under pressure earlier following the release of a weak jobs report.
The U.S. economy created 75,000 jobs in May, much fewer than expected, while wage inflation eased, the Labor Department reported.
The data raised expectations that the U.S. Federal Reserve will cut rates. Analysts were already expecting a cut before the data came out, as intensifying trade tension between the U.S. and China raised concerns of a slowing global economic growth.
Fed Chairman Jerome Powell indicated last week that the central bank would “act as appropriate to sustain the economic expansion."
U.S. Treasury Secretary Steven Mnuchin said over the weekend that the U.S. will “go forward with our plan” to impose more tariffs if discussions with China do not go well.
The USD/CNY pair was up 0.4% to 6.9334 even after data showed China’s overall trade surplus in May was significantly more than expected.
In a June 8 note cited by Bloomberg, Goldman Sachs (NYSE:GS) said it expects the Chinese currency to weaken past 7 per dollar in the next three months due to higher U.S. tariffs.
However, effective capital controls will limit the yuan’s depreciation, the investment bank said.
The AUD/USD pair and the NZD/USD pair both fell 0.4%.
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