The U.S. dollar was muted against key rivals early Tuesday but strengthened against the Mexican peso, which gave up the gains it eked out on Monday on the back of news of a new trade deal with its North American neighbor.
President Donald Trump announced Monday that the U.S. had reached a trade agreement with Mexico, and that he wanted to get rid of the North American Free Trade Agreement name. Canada, which is part of Nafta, hadn’t been part of the U.S.-Mexico negotiations. Trump said he would see if Canada could join the so-far bilateral deal, and that talks with Ottawa would resume soon and could lead to a separate deal.
The ICE U.S. Dollar Index DXY, -0.11% was little changed in negative territory, trading at 94.769. The broader WSJ Dollar Index BUXX, -0.03% which measures the U.S. currency against a larger basket of rivals, was up 0.1% at 89.16.
One dollar last bought 18.7997 Mexican pesos USDMXN, -0.0288% up from 18.7659 pesos on Monday.
Meanwhile, the Canadian dollar USDCAD, -0.1234% retained some strength against the buck, which bought C$1.2955, down from C$1.2966 late Monday.
“The Mexican peso has reversed the gains seen around Trump’s announcement yesterday that Mexico and the US have reached an agreement on NAFTA renegotiation, leaving general dollar weakness and CAD outperformance as the main effects,” wrote Adam Cole, chief currency strategist at RBC.
“Details on the bilateral deal between the US and Mexico are still sketchy, as is the status of Canada. Canadian officials will join talks today, with comment yesterday limited to Foreign Minister Freeland’s remark that she was encouraged by the optimism shown by the US and Mexico. Both the US and Mexico have said the deal will go ahead bilaterally if Canada is unable to join.”
Meanwhile, the euro EURUSD, +0.1627% was trading at $1.1689, little changed from $1.1678 late Monday in New York.
Anneken Tappe is a markets reporter for MarketWatch. She is based in New York.
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