Mexican Peso Slides as U.S.–China Tensions Resurface
Signs of rising trade tension between the U.S. and China drove risk aversion in a market that was also watching remarks from Powell.
Quick overview
- Tensions in U.S.–China trade relations have heightened market concerns, particularly following remarks from Federal Reserve Chair Jerome Powell.
- The Mexican peso weakened against the dollar, closing at 18.5064 pesos per dollar, reflecting a 0.20% depreciation.
- New port fees imposed by the U.S. and China, along with China's sanctions on South Korean subsidiaries, are contributing to market risk aversion.
- Mexican equity markets ended in negative territory as investors awaited Q3 earnings results, with the benchmark index slipping 0.43%.
Tensions in U.S.–China trade relations sparked concern in the market, which also focused on a speech from the Fed chair.
The Mexican peso weakened against the dollar on Tuesday. Signs of rising trade tension between the United States and China drove risk aversion in a market that was also watching remarks from Federal Reserve Chair Jerome Powell.
The exchange rate closed at 18.5064 pesos per dollar. Compared to Monday’s official Banxico close of 18.4691, the move represented a depreciation of 3.73 centavos, or 0.20%.
The dollar traded between a high of 18.6291 and a low of 18.4473 pesos. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.20% to 99.07 points.
The U.S. and China began imposing new port fees on maritime shipping companies moving all types of goods. In addition, China announced sanctions on five subsidiaries of South Korean shipbuilder Hanwha Ocean linked to the United States.
During his speech at the National Association for Business Economics conference, Powell said policymakers will take a “meeting-by-meeting” approach to any further rate cuts.
With the U.S. federal government shutdown now at 14 days, investors are still waiting for clearer signals, as key monthly employment data has been delayed for nearly three weeks. U.S. inflation data is due tomorrow.
Mexican Stock Market and Indices
Meanwhile, Mexican equity markets ended Tuesday in negative territory. Local indexes fell in the first session of Q3 earnings season as investors awaited results from América Móvil.
The benchmark S&P/BMV IPC of the Mexican Stock Exchange (BMV), which tracks the most actively traded local stocks, slipped 0.43% to 60,785.62 points. The FTSE BIVA index of the Institutional Stock Exchange (Biva) declined 0.58% to 1,213.70 points.
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