Peso Takes Hit On Report That U.S. Wants To Escalate Trade Claim

Spot USD/MXN has popped higher as Bloomberg ran a source report noting that the U.S. was planning to escalate its claims that Mexico's energy policies violate the nation's trade deal.

• "U.S. Trade Representative Katherine Tai's office in recent weeks has been working on a request for formal consultations under the U.S.-Mexico-Canada Agreement and discussing it with other agencies," Bloomberg reports. "The timing for the request is still being discussed."
• The spot rate ran as high as to MXN20.0893 before retracing a little bit and last deals at MXN20.0477, up 317 pips on the day. The next firm resistance area has been defined near MXN20.7000, where the rate printed three consecutive intraday highs in mid-June. Bears need a sell-off towards Jun 6 low of MXN19.4714 before targeting key support from May 30 low of MXN19.4136.
• Note that thin liquidity may have resulted in a stronger reaction swing than would happen in local trading hours.