Mexican peso jumps as Trump backs off from tariff war

Cornelia Mascio
Июня 12, 2019

The U.S. dollar gained against a basket of major currencies while the Mexican peso was on track for its biggest one-day percentage gain against the dollar since July 2018.

Earlier, S&P500 mini futures rose as much as 0.8pc and was last up 0.3pc.

Over the past year, trade disputes between the United States and its trading partners, including a long-running conflict with China, have slowed global growth and unsettled financial markets. Referring to weak May jobs data released on Friday, he added: "You can't deny the data".

Pan-region Euro Stoxx 50 futures rose 0.4pc, London's FTSE futures were up 0.5pc and German DAX futures gained 0.6pc.

The U.S. -Mexico trade and migration deal also boosted emerging market stocks and sent U.S. government bond yields higher as investors favored riskier assets.

That cautionary note was driven home by Chinese data on Monday morning showing imports contracted 8.5% in May from a year-earlier, a much worse than expected outcome that signaled weak domestic consumption.

China's exports unexpectedly returned to growth in May despite higher U.S. tariffs, data showed on Monday, but many suspected the rise was due to firms front-loading shipments to avoid higher United States tariffs.

Oil prices fell more than 1 per cent yesterday as US-China trade tensions continued to threaten demand for crude and as major producers Saudi Arabia and Russian Federation had yet to agree on extending an output-cutting deal.

Still, the dollar's gains were checked by rising expectations the Federal Reserve will cut interest rates during the second half of the year.

Nonfarm payrolls increased by 75,000 jobs last month, much smaller than the 185,000 additions estimated by economists in a Reuters poll.

The Federal Reserve's next policy meeting is set for next week, on June 18-19.

The euro pulled back from 2-1/2 month highs hit on Friday in the wake of an European Central Bank meeting that investors viewed as less dovish than expected.

Spot gold dropped 0.9% to $1,327.83 an ounce, after closing at its highest level since February on Friday.

The Chinese yuan was soft after China's central bank chief said late last week there was no one specific "numerical number" that was more important than another when asked if there is a red line for Beijing.

The yuan fell about 0.35% to as low as 6.9366 per dollar, its lowest since early December, in the onshore trade.

The euro was down nearly 0.3pc against the dollar at $1.1301 near a 2-1/2-month high of $1.1347 touched on Friday.

The offshore yuan was last seen at 6.9502 per dollar, having hit a seven-month low of 6.9619 on Friday.

"The yuan would weaken further should there be no summit meetings between the two countries at an upcoming G20 meeting in Osaka", Nomura's Kaku said.

US President Donald Trump had threatened to impose 5 per cent import tariffs on all Mexican goods starting on Monday if Mexico did not commit to do more to tighten its borders.

FILE PHOTO: People walk in front of a board displaying stock indexes in Tokyo April 22, 2015.

"There's a nice follow through on last week's optimism that global growth is likely to continue with trade tensions with Mexico backing off".

Oil prices edged lower on Monday in volatile trading as major producers Saudi Arabia and Russian Federation had yet to agree on extending an output-cutting deal and U.S.

Brent crude futures settled down 1.6 percent, or $1.00, at $62.29 a barrel.

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