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    Brazil plans to finalize and sign a trade deal with Mexico next year, says VP Alckman

    by VT Markets
    /
    Aug 28, 2025
    Brazil plans to complete negotiations for a trade agreement with Mexico by June 2026, aiming to sign it in August 2026. This announcement was made by Brazilian Vice President Alckmin and is expected to strengthen trade ties between Brazil and Mexico.

    Long Term Trading Strategy

    We see this news as a long-term signal rather than something that will quickly affect prices. Since the agreement is still a year away and there’s no guarantee it will be successfully negotiated, traders shouldn’t expect major market changes from this announcement alone. Instead, it’s a chance to start building positions for a long-term strategy. We believe this is positive for both the Brazilian Real (BRL) and the Mexican Peso (MXN) when compared to the dollar. In 2024, bilateral trade surpassed $15 billion, showing a solid existing relationship that this deal will enhance. Traders might consider gradually investing in long-dated currency options that expire in the second half of 2026 to take advantage of potential gains. This situation could also lead traders to focus on options for major market ETFs, especially EWZ for Brazil and EWW for Mexico. Key sectors, like Brazilian agribusiness and Mexican auto manufacturing, are likely to benefit, making their stocks good candidates for long call strategies. We recall the increased volatility during the USMCA negotiations in the late 2010s, so positioning now, when implied volatility is relatively low, could be a smart approach.

    Volatility Strategy

    The most straightforward approach is to focus on volatility around the June and August 2026 deadlines. Currently, one-year implied volatility on BRL options is around 14%, which does not seem to account for the chances of a successful breakthrough or a negotiation failure next year. Creating long-dated straddles could be a good strategy to take advantage of expected price fluctuations as those important dates draw closer. Create your live VT Markets account and start trading now.

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