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USD/MXN Touches Fresh Multi-Month Lows

  • Outperformance of Latam currencies extending so far Friday, with COP, CLP and BRL all printing the best levels of May against the USD. The real standout is MXN, with USD/MXN's 19.55 print today the lowest since January 2021.
  • Greenback weakness the main driver so far this week, with the USD Index narrowing in on the key 50-dma support at 101.32 - but solid oil prices also contributing for Mexico specifically.
  • Recall AMLO's plans a few months ago to curb oil exports from Mexico had been countered by reports earlier in May that Mexico are likely to extend their giant oil hedge (seen at around $1bln) into 2023, according to sources cited by Bloomberg.
  • The extension of the hedge would lock-in multi-decade high oil prices across the next 12 months, providing a considerable boon for Mexican government coffers.
  • USDMXN has now pushed through key support at 19.7274, the Apr 4 low, marking an important technical break and confirming a resumption of a bear cycle that started on Nov 26 last year. The move lower opens volatility-based support crossing at the 2.0% 10-dma envelope of 19.472
MNI London Bureau | +44 203-865-3809 |
MNI London Bureau | +44 203-865-3809 |

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