- The USD/MXN goes back 0.04% today, oscillating within the range of July 17 in 18.76.
- The dollar index (DXY) falls 0.20% daily, reaching minimum of two days in 98.47.
- The feeling of the consumer of the University of Michigan improves 61.8 in July compared to 61.5 expected.
- The operators will be attentive to retail sales of Mexico to be published on Tuesday, July 22.
The USD/MXN established a maximum of the day in 18.79, finding aggressive vendors that dragged parity at a minimum of two days in 18.67. Currently, the USD/MXN operates over 18.76, losing 0.04% in the day.
The Mexican weight gains traction in the medium of economic data of the United States
The US Census Office registered an increase to 1,397 million in June, improving the provision of 1.39 million and 1,394 million observed in the previous period.
On the other hand, the preliminary consumer’s feeling index of the University of Michigan rose 61.8 in July, improving the expected 61.5 and 60.7 registered in June.
Despite these results, the dollar index (DXY) falls 0.19% today, staying within the operational range of the previous session at 98.47.
The attention of the operators will be in the publication of the retail sales of Mexico next Tuesday, as well as in the inflation of the first half of July on Thursday, July 24.
The Mexican weight listed up, while the USD/MXN slides 0.04% on the last day of the week.
USD/MXN Price levels
The USD/MXN reacted upwards from a short -term support given by the minimum of July 9 in 18.55. Upwards, the closest resistance is located in 19.35 maximum of June 23. The next key resistance is observed in 19.78, a pivot point of May 6, in convergence with the exponential mobile average of 21 periods.
USD/MXN daily graphics
Mexican peso – frequent questions
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.
