Mexican peso falls as Trumps prospects rise

Despite a generally ailing US dollar on Tuesday due in part to heightened risk imposed by next week’s elections, the greenback rose sharply against the Mexican peso as Donald Trump’s presidential prospects continued to be lifted by Hillary Clinton’s ongoing email troubles.

The Mexican currency has been inversely correlated with Trump's campaign performance in recent months due to Trump’s very public and hardline positions on trade and immigration with respect to Mexico. A potential Trump victory would widely be seen as a negative for Mexico, leading to substantial pressure on its currency. This Trump-driven pressure on the Mexican currency has already been clearly seen as peso-weakness prompted USD/MXN to reach an all-time high around 19.92 in late September. The peso rebounded from that low against the dollar immediately after the first 2016 presidential debate between Donald Trump and Hillary Clinton on September 26th, in which Clinton was widely considered to be the victor. The peso then continued to rebound and USD/MXN continued to fall as Clinton’s lead widened throughout October.

Last week, however, USD/MXN rebounded from a key uptrend support line extending back to late April, as the peso began to retreat once again. This was exacerbated by Friday’s news that the FBI was opening a new investigation into Clinton’s potentially damaging emails and private email server from her stint as Secretary of State, which helped boost Trump’s campaign. On Tuesday, the Mexican peso sharply extended its pullback as Trump continued to build some momentum, prompting a strong surge for USD/MXN.

Currently, USD/MXN has shot back up above a short-term uptrend line which had been broken down in mid-October. The Mexican peso, as well as the US dollar, remain laser-focused on how the Trump/Clinton drama plays out in the week remaining before the presidential election. Clinton presently still retains a lead in overall polling. But developments in the FBI investigation could change that in the days to come. If Clinton is able to salvage her lead, USD/MXN should once again head downward as the peso continues to recover from the fear of a Trump win. Alternatively, if the FBI’s investigation of Clinton proves too damaging to her campaign, USD/MXN could once again reach back up towards its noted 19.90-area all-time highs and above.

StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.

This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.

FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.