#usdmxn

#usdmxn

Escalating geopolitical risk continued to dominate global markets' concerns, with safe-haven demand keeping the dollar index anchored near a multi-week high.

Mexico's equity market does not trade in isolation from Washington. The country's economic relationship with the United States, governed by the United States-Mexico-Canada Agreement (USMCA), is the single biggest external variable for EWW over the next 12 months. When trade flows are stable, Mexican exporters, industrials, and materials companies see reliable demand. When that relationship is stressed, the fund reacts quickly.

The dollar stabilised to a certain extent today after retreating in the prior session, but could remain relatively volatile as markets react to geopolitical developments in the Middle East. Treasury yields were firmer following a pullback on Monday as well.

The expectations of a decrease in tensions triggered a pullback in oil prices, which in turn softened immediate concerns about inflation pressures. However, the broader geopolitical backdrop remains fragile, and any renewed escalation could quickly push oil prices, the dollar, and Treasury yields higher again.

USDJPY is no longer a one-sided story of USD strength. It has become a tug-of-war between two safe-haven currencies amid escalating geopolitical tensions and shifting monetary policies. This dynamic has widened volatility ranges and made the overall trend less stable.

The U.S. Federal Reserve confirmed yesterday that its trading desk did conduct a rare "rate check" on the exchange rate between the U.S. dollar and the Japanese yen on behalf of the White House earlier this year. The move is often regarded as a precursor to actively intervening in currency markets. In this case the implication would be that the U.S. Treasury wanted to strengthen the yen versus the dollar (or, vice versa, weaken the dollar versus the yen).

EUR/USD has continued its downward trend since peaking around 1.2080 at the end of January, as the divergence in economic prospects between the United States and the Eurozone has become increasingly evident. This movement reflects the current macroeconomic landscape, where the US dollar remains supported by relatively stable growth and inflation that is still above target, while the Eurozone faces slower expansion and lacks sufficient policy momentum to trigger a meaningful shift in expectations.

The U.S. dollar's value has fallen 8% over the past year, as the price of gold has skyrocketed, said the WSJ Dollar Index. Some think it is a good thing. President Donald Trump said recently a weaker dollar is great. The idea is a weaker currency boosts exports and employment while a strong currency can throttle an economy. While the idea of a weaker dollar has had supporters over the decades, economists often argue gains can be eaten up by domestic inflation and deflation.

The US dollar traded near multi-week highs on Thursday, supported by stronger-than-expected ISM Services data that helped offset concerns triggered earlier in the week by weak manufacturing figures. The ISM Services PMI rose well above expectations of 52.3 points. The report signalled the strongest expansion in the services sector since October 2024, with all subcomponents back in expansion territory for the first time since February. Notably, the employment index rebounded to 52 from 48.9, easing fears of a sharper labour market slowdown.

The resilience of gold above $4,800 per ounce at this stage reflects a delicate and complex balance between traditional supporting factors and emerging pressures-one that cannot be superficially interpreted or reduced to the movement of the dollar alone. It is true that the U.S. dollar's retreat from its recent peaks, after failing to sustain its recovery momentum from a four-year low, provided gold with a short-term breather and attracted some buyers.

The fall of the dollar, which has lost a fifth of its value against the euro since 2025, is the most tangible reflection of how money, through a series of shocks, has adapted to a worldthat of Donald Trumpwhere the old rules no longer apply. Conversely, the Republican's decision to nominate Kevin Warsh to chair the Fed is yet another sign that the White House regards Wall Street with respect.

Gold has been on a tear as the dollar is under pressure, raising questions about global confidence and market risk. The US economy and markets are unmatched in size. The dollar is the king of currencies, and US treasuries are often considered a safe-haven asset. But, investors appear to be reassessing that. This has weighed down on the greenback and cooled the stock markets.