The probable return of Donald Trump to the White House prompted a growth of the US dollar against other currencies.
At the close of trading on Wednesday, November 6, the dollar index stood at 105.50 points, showing an increase of 1.72 percent, one day before the presidential elections in the United States.
What is the dollar?
The dollar index is a broad basket of major currency crosses against which the US currency is compared.
Currencies depreciated against the dollar
According to this indicator, the most depreciated currencies against the dollar today were:
- The Hungarian forint with 1.95 percent
- Czech crown with 1.88 percent.
- Japanese yen with 1.88 percent.
- The Danish krone with 1.78 percent.
- Euro with 1.77 percent.
For their part, the most appreciated currencies were:
- The Brazilian real with 1.25 percent.
- The Israeli shekel with 0.56 percent
- Turkish lira with 0.31 percent.
At the close of the session, the Mexican peso returned to its average level, standing at 20.11 pesos per dollar.
With the above, the dollar showed an appreciation of 0.19 percent compared to the data recorded on Tuesday.
Although the Mexican currency still shows a depreciation against the US currency, it is out of the “scare”, during the night it took the exchange rate to a new maximum in the year of 20.80 pesos per dollar.
According to Quásar Elizundia, expert research strategist at Pepperstone, this decline shows the fragility of the peso in the face of Trump’s protectionist policies and the risk of possible “renegotiations” of the Treaty between Mexico, the United States and Canada (T-MEC).
In addition to speculation about the imposition of new tariffs or an early review of the T-MEC worry analysts, who fear that the manufacturing and automotive sectors, pillars of the Mexican economy, will be affected by increases in export costs.
Likewise, the strength of the dollar adds pressure on the crude oil pricesdirectly affecting Mexico’s oil revenues, a vital source for the country’s fiscal balance.
“If these conditions persist, we could observe a rapid deterioration in the fiscal and trade balances, which could increase pressure on the peso and limit the prospects for economic growth,” he said.
Risks in foreign investment
Quásar Elizundia warned that foreign investment also faces considerable risks such as the recent fall in the gross fixed investment and the delay in the execution of public projects aggravate the situation, since many investors could choose to redirect their resources towards markets with greater political and economic stability.
In addition, he warned that the Trump administration could adopt measures that affect remittances and increase migratory tensionswhich would have a direct impact on millions of Mexican families that depend on these flows.
“If this uncertainty continues, 2025 could become a difficult year for Mexico, with an economy struggling to grow in an increasingly challenging context, both internally and externally,” said Elizundia.
In the United States capital market, optimism was observed after Donald Trump was announced as the winner of the presidency, due to the proposal to reduce corporate taxes, which would help improve company profits.
Projection in other markets
The market’s optimism is unusual, since in the last 24 elections (since 1928), the indices in the United States usually lose the day after the election.
For the Dow Jones, on average a loss of 0.56 percent has been observed and for the S&P 500 losses average 0.75 percent.
In today’s session, the Dow Jones registered a gain of 3.57 percent, the largest since November 10, 2022, reaching a new all-time high in the session of 43,778.78 points.
In the case of the S&P 500, it showed a gain of 2.53 percent, the largest since November 10, 2022, reaching a new historical maximum of 5,936.14 points.
Inside, the gains of the sectors stood out: financial (6.16 percent), industrial (3.93 percent), discretionary consumption (3.62 percent) and energy (3.54 percent).
At the broadcaster level, several reached a new historical high in the session, highlighting: Nvidia, Amazon, Netflix, Walmart, JP Morgan, Goldman Sachs, Palantir, Blackrock and American Express.
For its part, the Nasdaq Composite gained 2.95 percent in the session, also reaching a new all-time high of 19,050 points.
In Europe, losses are seen due to nervousness that Trump wants to start a trade war with Europe.
The STOXX 600 recorded a loss of 0.54 percent.
The German DAX showed a drop of 1.13 percent, leading the index to close at its lowest level since October 3.
For its part, the FTSE 100 in London lost slightly 0.07 percent, linking two sessions of losses.
In Mexico, the Consumer Price Index (CPI) of the Mexican Stock Exchange (BMV) closed the session with a gain of 1.61 percent, the largest since October 4.
Inside, the stations’ profits stand out:
- Cemex of 8.35 percent.
- Banorte 3.93 percent, Grupo Aeroportuario del Pacífico 1.95 percent, América Móvil 1.13 percent.
- Alpha of 4.90 percent.
KL
