The Mexican peso tells you how seriously the market is taking the tariff threat

The Mexican peso is scarcely lower than where it was when Trump first announced he would be putting a 25% tariff on all exports from the country, including oil & gas.

The market barely believed it at the outset because it would drive up prices for American, badly hurt American companies operating in Mexico and invite retaliation.

Trump started to walk back the threat late yesterday.

That’s optimistic and Sheinbau later said there was “no potential tariff war” and that caravans were being dealt with in Mexico.

My best guess (and it’s always a guess with Trump) is that he’s going to allow free trade in North America while leaning on tariffs abroad to meet his goals. That could mean this is an opportunity to buy the Mexican peso and Mexican assets.

This article was written by Adam Button at www.forexlive.com.