USD/CAD, USD/MXN: what happens when Trump changes his mind
Mexican Peso and loonie made intraday reversals after President Donald Trump said he wasn’t going to terminate NAFTA at this time, just a day after his administration had been considering an executive order exiting this trade union as early as Trump’s 100th day in office. The White House reported that Donald Trump spoke by phone with Mexican nation’s leader Pena Nieto and Canadian PM Justin Trudeau and agreed to hold off on a swift termination of NAFTA treaty. It was described as a pleasant and productive conversation in the WH release.
USD/CAD advanced to 1.3620 earlier this week after Trump’s administration imposed new duties on lumber imports from Canada and pledged to defend US farmers against dairy protection measures enacted in its neighbor. On Tuesday, the USD extended its gains as US government was considering the introduction of an executive order to end NAFTA. In Tokyo morning, USD/CAD retreated from its high around 1.3645 and found a solid support at 1.3527. As long as the pair stays above 1.3410 the prices main renew their strengths and rise higher towards 1.3570-75 area, or towards a very strong resistance near the 1.3600 handle. There is a golden cross with the 50-day MA crossing the 200-day MA pointing out at the probability of further upside pressures.
The Mexican peso has suffered the most on Tuesday on the talk of preparing an executive order on withdrawing out of NAFTA. Trump has repeatedly vowed to pull out of the 23-year old predatory trade deal and renegotiate it with better terms for US. He was accusing Mexicans of destroying US jobs; he wanted to build a wall on the border with Mexico. No wonder, the Mexican peso has been on a roller-coaster ride since Trump’s election victory.
USD/MXN spiked to 19.28 overnight. In the Asian session, the pair recouped its losses having slid to 18.90. The MXN may well extend its gains towards the solid support around 18.45. A move above 19.30 (yesterday’s high) will indicate that the USD managed to regain its strength and that it is ready to test a resistance at 19.60 (200-day MA).
