• The Mexican Peso extends its weakness into a fourth day as multiple risks lead traders to press “sell”. 
• Trump Tariff threats, a critical IMF report, political risks and weak data all combine to weigh on the Mexican currency. 
• USD/MXN extends its rally from the base of a major rising channel as technical indicators point north.

The Mexican Peso (MXN) seems to be rinsing and repeating the depreciation of the past few days on Thursday as market bears – now more confident in the persistence of the evolving downtrend – push the Peso lower in all its key pairs. 

A cocktail of ingredients is contributing to the Peso’s shakedown, including former president Donald Trump’s threat to slam Mexican auto imports with tariffs of up to 300%, an International Monetary Fund (IMF) report that highlighted a slowdown in economic activity; political risk, and a deterioration of Consumer Confidence data for September. 

Mexican Peso cracks as Donald thumps imports piñata

The Mexican Peso declined on average 1.5% on Tuesday, after Donald Trump said in an interview with Bloomberg News that “Mexico is a tremendous challenge for us.” He went on to explain how China was building mega car-manufacturing plants on the US-Mexico border, from where it was flooding the US market and hounding out US competitors.  

Trump vowed to stop the practice by reinstating high tariffs and so enable a regeneration of the US auto industry. Given the significance of the automotive industry to the Mexican economy, as well as the demand for Peso’s generated by exports to the US, the former president’s comments weighed on MXN.