One of the most fascinating sideshows of the US election campaign is how the Mexican peso has improbably emerged as a gauge of investor expectations about who could become the next US president. It is not hard to figure out why. Donald Trump has made Mexico a key part of his message. He has attacked the free-trade deal between the US and its southern neighbour. He has spoken harshly about unchecked migration from Mexico. The peso has rallied each time Trump lost ground in the opinion polls, while it has retreated whenever Trump closed the gap with Hillary Clinton.
The trust in the ability of pundits to predict election results was thankfully destroyed long ago. There is already an ongoing debate whether online election markets are better predictors of voter preferences than traditional sample surveys. However, the result of the US election could spark a new debate on whether proxy variables such as the peso do the job even better than election markets or opinion polls.