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USDMXN Off Recent Lows, Domestic Risks Linger

MEXICO
  • Weaker equities and oil prices fuelled a turnaround in the Mexican peso yesterday which fell just short of 20.00 overnight, the level that broke to the downside on April 15. Risk off sentiment saw the Bloomberg dollar index inch higher throughout the US session and in line with peso losses the TIIE curve bear steepened.
  • The recent strength in MXN appears to be largely ignoring some potential domestic risks, including developments on outsourcing/energy bills, continued dovish rhetoric from the central bank and the upcoming mid-term elections. Trading desks have reported better local buying on dips in USDMXN. On the upside, resistance is at 20.2427, Apr 13 high.

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