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USDMXN Rises 1.25%, Approaches Key Resistance At 17.4280

MEXICO
  • Rising treasury yields and the associated weakness for emerging market currencies continues to underpin the latest bout of USDMXN strength. The pair is now up 1.25% on the session, which extends the latest recovery towards key resistance at 17.4280, the Aug 4 high. A clear break of this hurdle is required to highlight a potential short-term reversal and open 17.7714, the May 31 high.
  • Domestically, while markets may have initially welcomed the expected additional government support to state-owned Pemex in the 2024 budget, the moves may now be seen as short-term fixes that do little to improve the driller’s credit profile and also negatively impact the nation’s fiscal position.
  • As noted, the key events in Mexico this week will be the Morena governing coalition announcing its presidential candidate on Wednesday and Thursday’s release of August CPI.

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