Mexican Peso Strengthens Following the U.S.-Japan Agreement
Trump announced a “massive” deal with Japan involving reciprocal 15% tariffs. He also expressed hopes of reaching an agreement with the EU.
Quick overview
- The Mexican peso appreciated against the U.S. dollar for the fourth consecutive day, closing at 18.5329 pesos per dollar.
- This rally was driven by optimism following President Trump's announcement of a trade agreement with Japan involving reduced tariffs.
- The peso's current strength marks its best level in nearly a year, gaining 1.19% since last Thursday.
- Traders are closely monitoring upcoming inflation data from Mexico, which is expected to show a modest increase.
The Mexican peso appreciated against the U.S. dollar on Wednesday, marking its fourth consecutive day of gains. The rally was fueled by market optimism following U.S. President Donald Trump’s announcement of a trade agreement with Japan.
The exchange rate closed the session at 18.5329 pesos per dollar, strengthening 10.54 centavos (0.57%) compared to Tuesday’s official closing of 18.6383, according to data from the Bank of Mexico (Banxico). This marks the peso’s strongest level in nearly a year.
The dollar traded between a high of 18.6863 and a low of 18.5245 pesos, while the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, slipped 0.16% to 97.20.
Trade Optimism
In a post on his Truth Social platform, Trump announced a “massive” deal with Japan involving reciprocal 15% tariffs. He also expressed hopes of reaching a similar agreement with the European Union.
Japanese Prime Minister Shigeru Ishiba confirmed that the 15% tariff would also apply to automobiles, down from the previous 25%, noting that 15% is the lowest rate among countries with which the U.S. runs a trade deficit.
Markets also reacted positively to news of a proposed $550 billion Japanese investment fund targeting the U.S. economy. With the August 1 tariff deadline approaching, investors are hopeful that the agreement could pave the way for deals with other nations and help ease global trade tensions.
Peso Rides Four-Day Streak
The peso has now gained 1.19% (22.40 centavos) since last Thursday’s close of 18.7569. During today’s session, it touched its strongest level since August of last year.
If the rally continues, the next technical support level could be around 17.80 pesos per dollar. Traders will be watching closely for Mexico’s mid-July inflation data, expected tomorrow, which is anticipated to show a modest uptick.
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