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Mexican peso strengthens against US dollar after Trump speech

Mexican pesos and U.S. dollars banknotes in Mexico City.
Edgard Garrido | Reuters
Mexican pesos and U.S. dollars banknotes in Mexico City.

The Mexican peso extended earlier gains against the U.S. dollar after President Donald Trump spoke at his inauguration Friday.

"From this day forward, it's going to be only America first, America first. Every decision on trade, on taxes, on immigration, on foreign affairs will be made to benefit American workers and American families," Trump said.He did not specifically mention measures against Mexico, such as his promises to build a wall along the U.S.-Mexico border or renegotiating the North American Free Trade Agreement.

Mexican President Enrique Pena Nieto tweeted congratulations to Trump on his inauguration and said sovereignty, national interest and protecting Mexicans will guide the relationship with the U.S. government.

In Friday afternoon trade the currency cross was near 21.55 pesos versus the dollar, with the Mexican currency up more than 1.5 percent on the day to its strongest since Wednesday.

Dollar-peso two-day chart

Source: FactSet

Currency strategists attributed the move to several factors, including low trading volume and a slight pullback in the dollar-peso after a steady move in the currency cross that took the Mexican currency to record lows against the greenback earlier this year.

"Ultimately something is going to happen," said Andres Jaime, global FX and rates strategist at Barclays. "But probably it's not going to be as extreme as some people had assumed."

"The important thing about the last few days, there is no incremental news about what Trump would pursue," Jaime said. "Both before and after the Trump speech, [there is] nothing new."