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MXN Enjoys Temporary Reprieve Amid More Optimistic EMFX Sentiment

MEXICO
  • Global core FI yields have moved back from lows, although the hope regarding Chinese stimulus and the lingering impact of Monday’s Fedspeak have combined to counter any yield spill over. This is keeping equity futures in positive territory which in turn is providing a much more optimistic backdrop for the likes of MXN and BRL, who are joining ZAR as the best performing EM currencies on Tuesday.
  • As noted earlier, USDMXN maintains a bullish tone having confirmed a resumption of the uptrend that started Jul 28 with sights remaining on $18.6172, the 76.4% retracement of the Mar 20 - Jul 28 downleg. A break of this level would open 19.2322, the Mar 20 high.
  • On the downside, initial support is at the 20-day exponential moving average which intersects at 17.6923. Lower down, key support has been defined at 17.3498, the Sep 29 low.

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