Trump Adds to Market Anxiety

In the aftermath of a much anticipated speech, US President-elect Donald Trump refrained from outlining many policy points during his press conference, disappointing markets hoping for more certainty regarding the outlook.  Despite expectations that he would cover items such as fiscal stimulus and tax reform, these issues went untouched during his comments, with the main focus centered on his solution to handle potential conflicts of interest with his existing business holdings.

Keeping to his traditional strategy over the last few months, he was very vague on details, instead preferring to keep policy plans under wraps until after the inauguration which is scheduled for January 20^th.  In reaction to the looming ambiguity surrounding policy, the US dollar continued to give back ground on Wednesday, pushing gold prices back above $1200 per troy ounce to the highest point since November.

With Trump’s speech spurring another selloff in the Mexican currency, the Peso remains under serious pressure this week despite multiple moves by the Central Bank to prop up the currency.  On the whole, the Central Bank has spent approximately $4 billion in an effort to go ahead and reverse the ongoing Peso slide with little to no impact.

There is significant fear amongst Mexican economic circles that the tremendous gains in economic activity over the past two decades are about to be reversed, especially if Trump remains serious about renegotiating NAFTA.  Besides the Peso, fundamentals are also under increasing pressure with industrial production flat-lining at 0.00% month over month while annualized growth printed at a modest 0.30% for the 12-months through the end of November.  Since topping 22.0000, USDMXN has pulled back modestly to just above 21.3000.