US Dollar Drops Against the Peso as News Flies on Friday
The US dollar fell against the Mexican peso on Friday as we have seen a lot of various news releases and announcements in the USA during trading.
USD/MXN
The US dollar fell against the Mexican peso during the trading session on Friday as we continue to see the longer-term trend hold itself. After all, you get paid to hang on to the Mexican peso against the US dollar as the interest rate differential continues to favor the downside.
However, Friday was a bit of a different scenario as we had multitudes of announcements coming out to get the market moving. The most important one remains the situation where the Advance GDP had been weaker than anticipated, mainly due to a government shutdown, but at the same time Core PCE is a little hotter than anticipated.
Tariff Dynamics and Economic Outlook
Later we got word out of the Supreme Court that they have voted against the way the tariffs had been applied out of the Trump administration and therefore we seen the US dollar struggle a bit there. Since then, the President has suggested that there are going to be even higher tariffs going forward although the exact mechanism isn't known.
There are other mechanisms that the Trump administration can use, so I think ultimately this ends up being a wait and see type of scenario. The best thing about this is that the interest rate differential favors the downside, and if the US economy ends up being stronger than anticipated, it favors the downside as well because Mexico is the #1 exporter into the United States.
I continue to fade rallies, and I think if we can break down below 17, we open up the move to 16.5 below as that is an area where we had seen pretty significant support previously.