Trump indicator

October 23, 2016 01:00 PM
A recent story in Bloomberg suggested that a strong negative correlation between the prospects of a Donald Trump presidency and the health of the Mexican peso.

A recent story in Bloomberg suggested that a strong negative correlation between the prospects of a Donald Trump presidency and the health of the Mexican peso. 

A closer look shows that there may be something to it. The USD/MXN (rises as the value of dollar increases vs. the peso) has hit peaks or reversed as Trump’s chances rose. USD/MXN hit a high after Trump won New Hampshire, the first time his candidacy began to be taken seriously. After strengthening against the dollar for months, the peso reversed when Senator Ted Cruz (R-TX) dropped out, making Trump the presumptive nominee. The correlation has grown in more recent swings in the polls. 

While there are many factors affecting this currency pair, traders definitely need to consider Trump’s chances before putting on or taking off a trade. 


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