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MEXICO: USDMXN Extends Intra-Day Decline to 0.90%

MEXICO
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  • USDMXN has extended its pullback on Friday, with intra-day losses reaching 0.90% in recent trade. This follows a very brief test above 20.00 during Thursday’s session, and the substantial rally this week may have placed the pair in a short-term overbought condition.
  • The softer US IP data on Thursday coincided with this turnaround and price action is consistent with the slow grind lower for the broad dollar index and US yields. Additionally, the firmer-than-expected China growth data overnight has potentially assisted the peso recovery and profit taking dynamics may be in play ahead of the week’s close.
  • Uncertainties surrounding the US election and this week’s tariff commentary from former President Trump keeps USDMXN around 2% higher on the week, having sharply rallied from 19.25 and being underpinned by a bullish technical theme and a failed breach of the 50-day EMA.
  • Indeed, both BBVA and CIBC have highlighted their bearish peso preference with the latter foreseeing USD/MXN retesting its year-to-date high around 20.2, and not ruling out a larger, albeit brief, spike towards 21.00 as credit rating concerns increase. 
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  • USDMXN has extended its pullback on Friday, with intra-day losses reaching 0.90% in recent trade. This follows a very brief test above 20.00 during Thursday’s session, and the substantial rally this week may have placed the pair in a short-term overbought condition.
  • The softer US IP data on Thursday coincided with this turnaround and price action is consistent with the slow grind lower for the broad dollar index and US yields. Additionally, the firmer-than-expected China growth data overnight has potentially assisted the peso recovery and profit taking dynamics may be in play ahead of the week’s close.
  • Uncertainties surrounding the US election and this week’s tariff commentary from former President Trump keeps USDMXN around 2% higher on the week, having sharply rallied from 19.25 and being underpinned by a bullish technical theme and a failed breach of the 50-day EMA.
  • Indeed, both BBVA and CIBC have highlighted their bearish peso preference with the latter foreseeing USD/MXN retesting its year-to-date high around 20.2, and not ruling out a larger, albeit brief, spike towards 21.00 as credit rating concerns increase.