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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
MEXICO
- Without offering clues on the pace or timing, Bank of Japan Governor Kazuo Ueda said on Wednesday that the Bank will continue to raise the policy interest rate and adjust the degree of easy policy in future. As such, the JPY short-squeeze has extended, placing significant pressure on popular global carry trades. Specifically, the substantial yield differentials between Mexico and Japan have seen MXNJPY (-1.72%) extend its reversal from the May highs to over 16%.
- As we noted yesterday, the cross had been trading just above a notable cluster of support between 8.0750/8.1500, which included several daily lows across the second half of 2023.
- The resultant price action has seen this area cleared, and a subsequent extension below the psychological 8.00 level to test initial trendline support around 7.93.
- A daily close at current levels would signal scope for a deeper correction, a move that could be exacerbated by both USDJPY breaking below 150.00 and USDMXN breaking above 19.00. 7.4576 looks to be the most notable level of support on the chart, the 38.2% retracement of the 2020-2024 rally. This level would also coincide with another trendline support, intersecting around 7.51.
- Domestic fundamentals also remain interesting at this juncture, with consensus expecting a Banxico cut on August 08 and investors remaining cautious on constitutional adjustments from the incoming Sheinbaum government.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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