Dollar Struggles as U.S.-Mexico Talks Stall
The U.S. dollar was lower on Thursday afternoon in Asia after a difficult day of negotiations between the U.S. and Mexico on Wednesday in which negotiators failed to find a compromise about trade and immigration issues. The dollar index eased 0.06 percent as of 1:18 p.m. HK/SIN, to 97.26 .DXY. The dollar slumped 0.25 percent against the yen, to trade at 108.18. The euro gained 0.12 percent against the greenback to trade at $1.1232, while the pound was up 0.04 percent against the dollar to $1.2688.
Mexican negotiators were in Washington yesterday with the express goal of avoiding the tariffs that U.S. President Trump has vowed to place on Mexican goods next week if Mexico doesn’t take immediate efforts to stop illegal immigration to the U.S. Trump’s tariff plan for Mexico includes putting a 5 percent tariff on all Mexican imports and increasing the tariff by 5 percent per month until the tariff hits 25 percent, if a deal isn’t reached in the interim. Among the points that the U.S. is demanding of Mexico is to crack down on asylum seekers, tighten its own border with Guatemala and solve the problem of government corruption that the U.S. believes is rampant at Mexican immigration checkpoints. Mexico has argued that it has already addressed these issues and that the tariffs will not serve to solve the mentioned problems, but U.S. negotiators remain firm in their demands. President Trump tweeted on Wednesday that progress was made but that it was “not nearly enough.” Talks are expected to resume on Thursday.
With negotiations stalled, traders are now looking to the European Central Bank whose policy decision will be released later on Thursday. The ECB is under pressure to boost the eurozone economy and to provide insights into whether more stimulus will be forthcoming.