- The USD/MXN advances 0.17% today, reaching maximum of June 9 at 19.10.
- The dollar index (DXY) rises 0.23% on the last day of the week, consolidating within the operational range of the previous session 98.09.
- The index of the consumer’s feeling of the University of Michigan increases to 60.5 points, improving the projections of analysts.
- Geopolitical tensions climb in the Middle East after Israel attacks to Iran made yesterday.
The USD/MXN marked a minimum of the day in 18.87, finding aggressive buyers that promoted the maximum of four days not seen since June 9 in 19.10. At the time of writing, the USD/MXN operates over 18.90, rising 0.12% on Friday.
The Mexican weight loses ground in the midst of renewed war conflicts in the Middle East
In the midst of a war escalation caused by a series of attacks by Israel to Iran, investors reflect their bewilderment by looking for shelter assets that allow them to reduce geopolitical risks.
In this sense, the dollar index (DXY) rebounds 0.23% today, staying within the June 12 range that 98.09, ending with two consecutive days down.
On the other hand, the feeling index of the consumer of the University of Michigan showed an improvement when reaching 60.5 points in June, located above the 53 estimated 5 points and the 52.2 observed in May.
After this news, the Mexican peso slides to a minimum of four days, while the USD/MXN advances 0.17% on the last day of the week, staying within the range of the previous session in 18.91.
USD/MXN Price levels
The USD/MXN formed a short -term resistance given by the maximum of May 30 in 19.43. The following important resistance is observed in 19.78 Maximum of May 6 in convergence with the decline at 38.2% of Fibonacci. To the south, the closest support is located at 18.59 minimum of August 16, 2024.
USD/MXN daily graphics
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
