MSCI Inc.’s EM currency gauge slid 0.4% on Thursday and was set for a 1.3% decline in July. On the flip side, the Bloomberg Dollar Spot Index is on track for its first positive month since President Donald Trump started his second term in office.
Despite that slump, recent tariff announcements have been beneficial for Latin America, according to Brendan McKenna, an emerging markets economist & FX strategist at Wells Fargo & Co.
The Mexican peso jumped to a session high and was up 0.4% after Trump said the US and Mexico extended a trade deadline for another 90 days to allow for negotiations. The Chilean peso was the top gainer among its peers, advancing Thursday after the Trump administration said refined copper would be exempt from an import tariff.
Meanwhile, a sister index tracking emerging market equities also fell 0.8%, for its biggest one day drop since mid-June. Stocks have trimmed their seventh month of gains, the longest winning streak since 2017.
The greenback’s advance in the wake of the Federal Reserve decision to hold rates could be threatened by Trump resuming criticism of Chair Jerome Powell, according to Juan Perez, senior director of trading at Monex USA.
“The US dollar rally that should have continued from yesterday’s hawkish meeting has been halted by the one thing that can get in the way of the US dollar, animosity towards the Federal Reserve that compromise both its independence and authority,” he said.
