Chinese Yuan Underprices Trade War Risks, Peso Too Weak

(Bloomberg) -- As the opening shots are fired in a global trade war, Bloomberg Economics’ fair model for currencies indicates which ones are already pricing in the risks. China’s exchange rate appears too strong and Mexico’s peso may have overreacted. The U.S. dollar is about 8.5 percent overd and could be supported by turmoil in the global economy, while the euro is close to fair , though it may weaken as the trade war continues.

©2018 Bloomberg L.P.