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USDMXN Extending Gains, Hovers Just Below 2021 Highs

  • USDMXN has risen aggressively following yesterday's technical breaks of 21.00 and 21.15. An appreciating greenback and TRY contagion seemed to spark the move, however, today's extension potentially proving more significant.
  • The pair has fallen just short of the 2021 highs, with the pair up 1.6% on the session.
  • As noted yesterday, EURMXN has risen to and is testing the downtrend from August last year (shown below).
  • The Banxico Governor nomination headlines have been surprising and may have exacerbated the most recent price volatility. The nomination of Victoria Rodriguez itself could potentially be perceived as dovish as it confirms another of AMLO's finance ministry representative and not any other slightly more hawkish candidate.
  • The overwhelming driver behind the move higher in Mexico TIIE Swaps is this morning's inflation print - likely to continue forcing Banxico's hand, irrespective of the board's makeup:
    • 2-yr +16 bps at 7.35%
    • 5-yr +18 bps at 7.65%
    • 10-yr +20 bps at 7.85%


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