UPDATE

Dramatic turnaround in risk sees a huge squeeze in USDMXN up to 20.6642 and remains up just under 3% on the day. Notable resistance levels were taken out on the move higher including 20.26 and 20.4350 as the Peso and other popular EM currencies capitulated.

• Price halts just shy of a double top at 20.69 from November 13with 20.85 the most notable resistance above which was the big breakdown level following the election.

Driven by global sentiment and USD demand, local factors have also contributed to the magnitude of the move.

• On Friday, Mexico State was returned to Covid Red Light. Mexico City has shut down all non-essential activity on the Covid spike until January 10.
• Mexican equities were the main mover on the news, tumbling sharply into the red before the weekend.
• Marginal dovish shift from Banxico will have contributed, with many analysts bringing forward their calls for more easing to the first meeting of 2021.
• As an indication from CFTC data, Investors have also been reducing their bullish MXN wagers for a second week, with positions turning into net short for the first time since June.