Mexican Peso pauses on Tuesday after run of down days

The Mexican Peso takes a break after a string of days in which the currency has seen losses. 

As an emerging market currency it remains sensitive to risk sentiment which has dipped in recent sessions.

USD/MXN pulls back from the key 20.00 level although the short-term trend remains bullish. 

The Mexican Peso (MXN) pauses on Tuesday after a multiple-day run of weakness in its key pairs. Emerging market (EM) assets had been hit by a general unwinding of risk appetite triggered by a recalibration of global interest rate expectations. This has generally hit risk-sensitive EM currencies like the Peso at the worst. The trend started after United States (US) investors changed their expectations about the trajectory of interest rates in the US, seeing them not falling as sharply due to unexpectedly strong US economic data. 

Further pressure on the Mexican Peso comes from former US President Donald Trump’s improved performance in opinion polls. This now means the race to the White House is neck-and-neck between him and US Vice President and Democratic candidate Kamala Harris. Trump has threatened to tear up the US’s free trade agreement with Mexico and whack up to 300% tariffs on Mexican cars imported into the States. Such a move would hit the Mexican economy and reduce demand for its currency. 

The latest poll by TIPP Insights on October 18-20 shows Donald Trump in the lead with 48% of the vote to Kamala Harris’s 47%, according to election website FiveThirtyEight. Betting website OddsChecker, meanwhile, gives Trump an 8/13 or 61.9% chance of winning over Harris’s 8/5 or 38.50%.