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USDMXN Extends Intra-Day Advance to 2.00%

MEXICO
  • Higher US yields, weaker equity benchmarks and the associated greenback strength have all supported an impressive USDMXN advance on Monday, rising 2.00% to trade at a high of 17.5386.
  • Last week we highlighted a broader quorum of the Banxico committee seemingly in favour of debating a rate cut in early 2024, in keeping with the dovish tweak to the statement guidance in November. With this in mind, this week’s inflation data will be in focus where core CPI is expected to rise moderately to 5.33% from 5.31% at the mid-November read.
  • Given the central bank’s data dependent stance, a downside surprise for this metric will be an important positive development for the committee. A reminder that most recently, Deputy Governor Jonathan Heath reiterated that a “decline in core inflation is particularly key to reaching inflation targets”.
  • Separately of note, US Treasury Secretary Janet Yellen will visit Mexico on Thursday, President AMLO said Monday during his daily press conference, and reported by Reforma.
  • As noted, the overall trend direction in USDMXN has been down, however, the latest recovery sees spot trade above initial firm resistance at 17.4888, the 50-day EMA. Further on the upside, a move above 17.9394, the Nov 10 high, would be a short-term bullish development and highlight a technical reversal.
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