USD/MXN: Mexican Peso drops as US-China tensions rise
- Mexico's Peso drops alongside losses in US stock futures and oil.
- US' sharper anti-China rhetoric has put the risk under pressure.
Mexican Peso is feeling the pull of gravity for the third straight trading day on Monday amid the rising US-China tensions over coronavirus and risk aversion in the financial markets.
At press time, the MXN is trading at 24.83 per US dollar, representing a 0.9% drop on the day. The pair fell by 1.75% on Friday and Thursday.
The US intelligence, on Sunday, accused China of covering up the severity of the coronavirus outbreak to stock up on medical supplies needed to respond to the virus. Additionally, Secretary of State Mike Pompeo said that that country was responsible for the pandemic.
As a result, the risk assets have come under pressure on the first trading day of the week. While the futures on the S&P 500 are down over 1%, the West Texas Intermediate crude, the North American oil benchmark, is trading 7% lower on the day.
The risk-off tone is boding well for the safe-haven dollar and the losses in black gold are weighing over the oil-sensitive Mexican Peso.
The Trump administration has intensified its criticism of China over the past few days with President threatening tariffs in retaliation to the virus outbreak. It is feared that President Trump would step up the anti-China rhetoric ahead of the Presidential elections in an attempt to deflect criticism at home. Hence, the odds of a sudden revival of the risk sentiment on Monday look bleak.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
