MW: Dollar wavers, but peso rallies after Clinton-Trump debate
The dollar on Tuesday slumped against the Mexican peso after some investors read the first presidential debate as a victory for Democratic nominee Hillary Clinton over Republican candidate Donald Trump.
Overall, the buck edged slightly higher against its other major currency rivals.
The ICE Dollar Index DXY, +0.11% a measure of the buck against a basket of six rival currencies, inched up 0.1% to 95.3910, making some headway after a 0.2% loss Monday.
However, the greenback declined against the peso USDMXN, -1.5871% following Monday nights clash between Clinton and Trump at the first of three presidential debates before November’s crucial election.
Read: Financial markets say Clinton beat Trump in the debate
The dollar declined to 19.550, down from 19.879 Mexican pesos USDMXN, -1.5871% late Monday in New York.
“The Mexican peso is particularly sensitive to the election and will likely remain very volatile over the next month or so. It’s currently up around 1.5% having pared earlier gains, but remains down almost 10% against the dollar since the middle of August as the odds of a Trump presidency have risen,” he added.
The Mexican peso has been acting as a proxy for sentiment in the U.S. presidential election on the theory that a victory for Trump, who has made building a wall between Mexico and the U.S. and overhauling the North American Free Trade Agreement—a trade accord between Mexico and Canada—one of the centerpieces of his immigration policy. Trump’s policies are viewed by some as weakening trade ties between the two countries.
“Clinton appeared to edge the first debate which has provided a lift for investors, albeit only a slight one as the polls remain extremely close and the campaign has a long way to go,” said Craig Erlam, senior market analyst at Oanda, in a research note.
In other currencies, the pound GBPUSD, +0.0925% extended its recent decline on concerns the U.K. government will opt for a so-called hard Brexit and take the country out of the European Union’s single market. Sterling fell to $1.2962 from $1.2974 on Monday.
The euro EURUSD, -0.2488% exchanged hands at $1.1243, down from $1.1255.
The yen USDJPY, -0.03% was almost unchanged, with the dollar buying ÂĄ100.38, compared with $100.33 on Monday.
