USD\/MXN has slipped back below 17.00 as Mexican officials stepped up discussions with US counterparts on trade, in the wake of a widening US-Canada rift. Economy Minister Marcelo Ebrard met US Commerce Secretary Howard Lutnick on the sidelines of the G20 summit, keeping bilateral trade talks in focus while the peso steadied.<\/p>\n
Mexico\u2019s car imports from China fell 31.1% year on year in 1H26 to 158,571 units after tariff adjustments intended to protect roughly 350k local jobs. In the latest activity data, the manufacturing PMI moved back into contraction, easing to 49.8 in August from 51.3 in July.<\/p>\n
We see the USD\/MXN rate dipping back below the 17.00 threshold as trade discussions between Mexico and the US gain positive momentum. This shift comes after Mexico\u2019s Economy Minister met with US Commerce Secretary Howard Lutnick to navigate trade dynamics amid a growing US-Canada rift. With President Claudia Sheinbaum expressing strong optimism for a swift trade agreement, the short-term bias for the peso remains bullish.<\/p>\n
To secure this relationship with the US, Mexico has aggressively targeted Chinese imports, resulting in a 31.1% year-on-year drop in car imports from China during the first half of 2026 to 158,571 units. This defensive tariff policy protects about 350,000 local jobs, aligning Mexico closely with Washington’s supply-chain priorities. Historically, this kind of strategic alignment has supported the Mexican Peso, much like the post-USMCA trading periods when the currency gained notable strength after bilateral trade tensions eased.<\/p>\n
However, derivative traders must hedge against underlying domestic weakness, as Mexico\u2019s manufacturing PMI slipped into contraction territory at 49.8 in August down from 51.3 in July. This economic slowdown suggests that the peso’s current strength below 17.00 might be fragile and prone to sudden reversals. We recommend using short-dated USD\/MXN call options or bull call spreads to position for a potential rebound back toward the 17.50 level if domestic economic indicators continue to soften.<\/p>\n
Alternatively, given the high-stakes trade negotiations, implied volatility for MXN options is expected to rise from its current levels. We suggest buying straddles or strangles to capture sharp, dual-directional moves as further news breaks from the G20 sideline discussions. This allows traders to benefit from heavy market swings regardless of whether the trade talks succeed or falter in the coming weeks.<\/p>\n\n\n\n