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USDMXN Trades To One-Month Low as Equities Extend Rally

MEXICO
  • Despite trading in a subdued manner in the direct aftermath of the US data releases earlier today, the Mexican peso has outperformed this afternoon. USDMXN is currently down a notable 1.2%, with the peso buoyed by the rally in equities and lower core yields following the in-line US CPI and weak US retail sales figures.
    • The broad USD index now sits at the lowest level since the prior inflation print on April 10 and this has helped USDMXN breach last Friday’s low and trade down to a one-month low around 16.65.
    • The pair remains below the 20- and 50-day EMAs, bolstering a bearish theme, and a continuation lower would pave the way for a move towards 16.50 initially and 16.2616, the Apr 9 low and a key support.
    • We noted earlier that across EM FX, MXN vols were posting sizeable two-day vol premiums ahead of the CPI print, potentially suggesting greater relative sensitivity into the Thursday NY cut. The peso’s renewed resilience is particularly interesting as we approach the June 02 general election.
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