* Peso briefly rises as much as 2% against dollar
* Dollar index up 0.2%, bouncing after having lost 1.2% last
week
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Daniel Leussink
TOKYO, June 10 (Reuters) - The Mexican peso jumped against
the dollar early in Asia on Monday after the United States and
Mexico struck a migration deal late last week to avert a tariff
war, providing much-needed relief to fragile market sentiment.
Over the past year, trade disputes between the United States
and its trading partners, including a long-running conflict with
China, have slowed global growth and unsettled financial
markets.
Group of 20 finance leaders on Sunday said that trade and
geopolitical tensions have "intensified", raising risks to
improving global growth, but they stopped short of calling for a
resolution of the deepening U.S.-China trade
conflict. The Mexican peso MXN=D4 rose as much as 2% against the
dollar as trading resumed for the first time after Mexico agreed
on Friday to expand along the entire border a programme that
sends migrants seeking asylum in the United States to Mexico.
The peso was last up 1.65% at 19.30 pesos per
dollar. U.S. President Donald Trump had threatened to impose 5%
import tariffs on all Mexican goods starting on Monday if Mexico
did not commit to do more to tighten its borders.
"We all knew that Donald Trump was unpredictable, but this
was taking it to a whole new level," said Chris Weston,
Melbourne-based head of research at foreign exchange brokerage
Pepperstone.
"This was political, it was social. It meant that financial
markets had to wear a higher risk premium."
Against the safe-haven yen JPY= , the dollar gained 0.2% to
108.425 yen.
The Japanese currency tends to benefit during geopolitical
or financial stress as Japan is the world's biggest creditor
nation.
Futures for the S&P 500 ESc1 were last up nearly half a
percent.
Still, the dollar's gains were checked by rising
expectations the Federal Reserve will cut interest rates during
the second half of the year.
Those views were bolstered on Friday when data showed
nonfarm payrolls increased by 75,000 jobs last month, much
smaller than the 185,000 additions estimated by economists in a
Reuters poll, suggesting the loss of momentum in economic
activity was spreading to the labour market. Fed funds rate futures are still pricing in more than two
25-basis point rate hikes by the end of this year even after
their retreat early on Monday after the U.S.-Mexico migration
deal.
"The market is saying it is not a question of if, it is a
question of when, and to what extent, we're going to get a rate
cut for this year," said Pepperstone's Weston.
Against a basket of six peers, the dollar rose 0.2% to
96.716 .DXY , recovering slightly after ending with a 1.2% loss
last week, its worst weekly performance since the week of Feb.
16 last year.
Elsewhere in the currency market, the euro EUR= edged down
0.1% to $1.1318, retreating from an 11-week high of $1.1348
touched on Friday.
The Australian dollar AUD=D4 was down a shade at $0.6995,
giving up some of last week's gains, when it rose 0.9%.
(Editing by Shri Navaratnam)