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The Dollar slumped after Mexico and the U.S. agreed to take steps that would suspend the implementation of tariffs on Mexican imports on Tuesday.
The agreement confirms the scope for worst-case scenarios to be avoided in upcoming frays, tempering U.S. Dollar demand.
The Pound to Dollar exchange rate leapt to 1.2420 in the minutes following the news, erasing earlier weakness.
"The Mexican peso, Canadian dollar, and euro are ripping higher after Mexican President Claudia Sheinbaum said she had spoken with Donald Trump this morning, and tariffs would be "paused for a month," pending "new border measures" that could help alleviate some of the US president's concerns," says Karl Schamotta, Chief Market Strategist.
The decision announced by Donald Trump comes after Mexican President Claudia Sheinbaum agreed to take additional steps to stem the flow of illegal migrants and drugs across the southern border.
"It was a very friendly conversation wherein she agreed to immediately supply 10,000 Mexican Soldiers on the Border separating Mexico and the United States. These soldiers will be specifically designated to stop the flow of fentanyl, and illegal migrants into our Country," said Trump.
The two sides agreed to immediately pause the anticipated tariffs for a one month period, during which negotiations will be headed by U.S. Secretary of State Marco Rubio, Secretary of Treasury Scott Bessent, and Secretary of Commerce Howard Lutnick.
"I look forward to participating in those negotiations, with President Sheinbaum as we attempt to achieve a “deal” between our two Countries," said Trump.
