Virus infection cases kept multiplying in the US Thursday, death tolls kept going up, more governors and mayors ignored President Trump’s dream of packed churches on Easter and the US kept mostly ignoring the kind of contact tracing that slowed the virus to a crawl elsewhere. By one count, the US number of infection cases […]
Americans who in even greater numbers are staying at home Monday were suddenly being asked to choose between two virus scenarios; one espoused by medical experts, the other by people newly afraid the economy is being irreversibly crippled, President Trump among them. Which view leads to the most prudent outcome, either an early relaxation of […]
White House Watch: Congress in focus as virus aid measure proposals balloon, while ‘Depression’ becomes the new watchword as deterioration deepens. What seemed premature and too extreme one day turns into coronavirus response moves that appear to be too late the next day, and Congress grappled Wednesday with the challenge of keeping up with a […]
White House Watch takes a look at the latest US response to the Covid-19 crisis. The economic and financial response to the virus crisis took a giant step Sunday, a 100bp Federal Reserve rate cut to near zero, while the health care response was considerably less impressive, with disease testing still far short of what’s […]
Despite the geopolitical situation worldwide becoming more volatile, FX markets have stayed relatively idle, leaving speakers at the Profit & Loss Forex Network London event to wonder what has caused this disparity. In recent months, news of geopolitical volatility – from Brexit woes to an intensifying trade war between China and the United States – […]
Galen Stops looks at the drivers behind the appreciation of the Mexican peso and asks whether the rally can continue.
Few, if any, saw this coming.
After Donald Trump won the US presidential race in November 2016, USD/MXN went from 18.03 up to 20.89, and by the time of his inauguration in January 2017, the exchange rate was up to 21.58.
This depreciation of the peso seemed eminently reasonable at the time, given that on the campaign trail Trump had promised to renegotiate the North American Free Trade Agreement (Nafta) in America’s favour or terminate the agreement altogether, not to mention building a border wall between the US and Mexico at the latter’s expense.
When assessing which large tail risk events are likely to take place in 2017, speakers at Profit & Loss’ Forex Network London emphasised that there are other risk factors being overlooked that might have a greater impact on financial markets.
“Like last year, the tail risks this year are quite high compared to normal,” said Colin Harte, strategist and senior portfolio manger at BNP Paribas Investment Partners. “There are some quite material risks that – if they come to pass – could have a significant impact on markets.”
He noted, however, that many of the expected tail risk events from 2016 were less dramatic than expected in the end: sterling took an obvious hit after the Brexit result, but soon became range-bound again, while the Trump election victory actually led to a rally in the equity markets.
Uncertainty regarding both financial conditions within Mexico and geopolitical developments internationally is making it hard to predict how the peso will fare in 2017.
Speaking at Profit & Loss Latin America, which took place on February 9 in Mexico City, economic experts warned that there are numerous variables that could impact the value of the Mexican currency this year, making accurate forecasts challenging.
“Uncertainty will be the name of the game this year,” explained Daniela Blancas, a financial market economist at CitiBanamex.
Sharon Bowen, commissioner at the US Commodity Futures Trading Commission (CFTC), warned that it could prove “reckless” to repeal Dodd-Frank, despite calls from Donald Trump to do so while he was campaigning for the presidency.
Speaking at the 2017 Brodsky Family Northwestern JD-MBA Lecture Series, Bowen acknowledged that the regulatory agenda under a Trump presidency is likely to be very different compared to when she joined the commission almost three years ago.
“When I first became a commissioner, it was with the expectation that the CFTC would continue its mission, established by long-standing laws and reaffirmed under the Dodd-Frank Wall Street Reform and Consumer Protection Act,
In the interests of total transparency we also, as usual, cast our eye over last year’s predictions to see how they went. As always, these predictions will be viewed through rose-coloured spectacles to ensure we look as good as possible!
We kicked off last year’s predictions by suggesting the entire FX world would take a more realistic view of developments – that liquidity and spreads would reflect this thought process, and that market share would be a declining influence in business decisions.