Mexico is located south of the United States. The country has a population of 127 million people and a GDP of $1 trillion. It is the fourth largest US trading partner after European Union, China, and Canada. This year, the Mexican peso has gained by 3.60% against the US dollar. It is one of the few currencies that have gained against the dollar this year. The gains are attributed to the successful election held two months ago. As shown below, the dollar has lost significantly after the election.
The pair reached the YTD low of $18.43 two weeks ago. Since then, it has gained and moving at the $18.81 level. Some of the gains came yesterday after the US announced a trade deal with Mexico.
Donald Trump has not had a good relationship with Mexico. He started his presidential campaign by talking ill about the southern border. He continued the rhetoric by announcing that he would build a wall between the two countries to prevent illegal migration. He also attacked Mexicans in many rallies. After winning the election, he had a poor working relationship with his Mexican counterpart. His approval ratings in the country and the views towards Americans declined. He even threatened to cancel the NAFTA agreement. Therefore, yesterday’s decision of a trade deal was big news for Mexicans and American farmers who supply their commodities to the country.
On the daily chart below, the pair is trading in line with the 25-day simple moving average. It is slightly above the 50-day SMA. Therefore, an upward trend is likely to be confirmed when the former SMA passes the latter SMA. If it does, the pair will likely continue the upward movements.