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MXN Stabilises Following Sharp Drop

MEXICO
  • Yesterday’s price action for USDMXN suggests the technical trend condition may have reversed following the bounce off 19.0401 last week, the Nov 29 low. Two important Japanese candlestick patterns have appeared on the daily chart both pointing to a bullish reversal.
    • Attention was on resistance at 19.5928, the Nov 21 low which has been pierced and 19.6430, the 50-day EMA. A clear break of both these hurdles would strengthen the reversal.
  • Analysts cited potential position squaring amid potential flows linked to cetes bond redemptions may have been exacerbating the squeeze higher. The Peso has stabilised on Tuesday amid the marginally softer USD and the domestic focus will be on Thursday’s inflation data ahead of Banxico’s decision on December 15.
  • Just released: Mexico Sept. capital investment rises 3.3% Y/y; Est. +5.5% (BBG)

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