Mexican peso jumps on report the US and Mexico reach preliminary NAFTA deal

A picture illustration shows Mexican pesos and U.S. dollars. PHOTO: REUTERS/Edgard Garrido

The Mexican peso jumped Monday after the US and Mexico reportedly reached a breakthrough on NAFTA, clearing the way for to an end to sluggish trade negotiations among the two countries and Canada that have dragged on for more than a year.

The peso was up as much as 1% against the dollar after US and Mexican trade negotiators reached an agreement to rewrite key parts of the deal, according to the New York Times, which could be announced as soon as Monday.

Still, negotiations on at least one “major” issue are still pending, Mexican Economy Minister Ildefonso Guajardo told reporters, according to Reuters.

The two countries earlier this month entered a round of bilateral negotiations for modernizing the decades-old trade deal, which President Donald Trump has threatened to pull out of. Sticking points that have stalled those talks include rules on automobile manufacturing and energy.

“Positive NAFTA headlines would reinforce short-run downside in CADMXN,” Mark McCormick, head of North American FX strategy at TD Securities, wrote in an email.

The peso was up nearly 5% versus the dollar this year.

Screen Shot 2018 08 27 at 9.51.55 AM
Screen Shot 2018 08 27 at 9.51.55 AM