UPDATE: Nieto cancels Trump meeting, Peso takes a pounding, Trump stands firm, Nieto makes a phone call...

Mexico's top finance officials vowed to take action during a joint press conference Wednesday morning in Mexico City but provided no specifics. "We will take the necessary measures," to support the economy, Mexico's finance minister Jose Antonio Meade, said Wednesday morning. "Mexico is in a position of strength." The reasons are obvious and, no, Mexico is not in a position of strength. However, Mexican President Enrique Peña Nieto sure likes to pretend it is. As we reported yesterday, Trump signed his immigration Executive Orders, Nieto freaked, threatened to cancel a planned meeting, and Trump called his bluff. Everyone waited to see what he'd do next. Last night, Nieto announced that the meeting was off.

Outraged Mexicans back Peña Nieto's decision to scrap visit with 'bully' Trump https://t.co/WxbGOXkibG pic.twitter.com/Jq4DbgckQo

— USA TODAY (@USATODAY) January 26, 2017

This played well in Mexico, but it didn't do the already-battered Peso any favors. As CNBC reported:

Twitter diplomacy just ripped the Mexican peso, again. At its low, the currency was down more than a percent against the U.S. dollar after Mexican President Enrique Pena Nieto canceled a meeting with President Donald Trump, in a dispute over Trump's border wall. It later reversed some of the losses.

Trump refused to back down. Instead, he took to Twitter and Facebook to, once again, make it clear that our stance toward Mexico was about to change. Nieto cancels Trump meeting, Peso crashes, Trump stands firm

Mexico has taken advantage of the U.S. for long enough. Massive trade deficits & little help on the very weak border must change, NOW!

— Donald J. Trump (@realDonaldTrump) January 27, 2017

Now, the AP is reporting that the two Presidents have engaged in an hour-long phone call.

President Donald Trump and the president of Mexico have spent one hour talking on the phone amid rising tensions over Trump's proposed wall along the border.

Two administration officials confirmed Friday's call. Trump and Enrique Pena Nieto (PAYN'-yuh nee-EH'-toh) were supposed to meet in Washington next week, but the Mexican president said Thursday that he was canceling the visit. The two administration officials spoke on condition of anonymity because they were not authorized to discuss the call publicly.

The content of the discussion has, obviously, not been made public. Again, this all feels like negotiation 101. Establish a hardline position, walk away, double down on your position, and wait for your opponent to re-engage. Then, and only then, you begin the process of de-escalation, scaling your demands back to what you actually wanted in the first place. Where we end up in this process remains to be seen. As always, we'll keep an eye on it.