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USD/MXN extends the recent decline.....>

MEXICAN PESO
MEXICAN PESO: USD/MXN extends the recent decline having broken and closed below
the 19.1764 50-dma yesterday for the first time since mid-December last year
(today, however, the 200- and 50-dmas are in death cross formation). More
notably, however, is that USD/MXN has now broken longer-term uptrendline support
which kicked in today at 19.0526.
-The move appears largely driven by USD weakness rather than EM/LatAm strength
(although CLP is trading well), with EUR/MXN flat on the day after two sessions
of sharp losses.
-Today may see more interesting price action in MXN after a thin trading session
Monday (local markets were closed for a market holiday) which prompted USD/MXN
implied vols to slide further (1m USD/MXN implied hit 8.458 vol points Monday,
the lowest since late 2014). Largest options rolling off in USD/MXN this week
include $895mln rolling off between 19.30-33 on Mar21.
-Of note, yesterday Goldman Sachs said the ZAR has replaced MXN as the best
risk-off hedge after long USD/MXN was "consistently among the best hedges
against global risk sentiment during the past 15 years".

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