- Emerging currencies are mostly down against the dollar.
- USD / MXN around the important 20.00 zone.
USD / MXN fell to 19.89 on Thursday, the lowest level in two weeks, but then rebounded, cutting losses. It closed the day at 19.95 and today it is rising modestly and is trading at 20.02.
USD / MXN trend remains bearish. The close below 20.00 was not enough to give the Mexican peso more momentum. Between 19.95 and 20.00 there is a strong barrier that could be tested again, if there is no deterioration in the mood of the markets.
The Mexican peso remains strongly correlated with what stocks are doing on Wall Street. In the event of a correction in the equity markets, it would be difficult for the USD / MXN to break firmly below 20.00. In the opposite direction, a rally above 20.15 would support the dollar for more gains in the short term.
Banxico cuts as expected
Thursday, the governing board of Banco de México decided unanimously to cut the benchmark interest rate by 25 basis points to 4%. Analysts at Capital Economics warn that the window for further cuts is too small. Most analysts anticipated such a decision that it did not have a major impact on the market.
A devaluation of the Mexican peso or a rise beyond 4% in the annual inflation rate could lead to further easing by the central bank being completely ruled out. On the contrary, if inflation returns to its downward bias and the peso remains firm, further cuts are possible.
Technical levels
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