- The Mexican peso accelerates against the dollar at the beginning of the week.
- USD/MXN breaks 19.70 and then 19.50, two critical support zones.
- Improved risk sentiment drives demand for emerging market currencies.
The USD/MXN falls for the fifth day in a row on Monday. It hit 19.41, the lowest level since March 2020. It is hovering slightly below 19.50, paring losses.
Global stock markets are higher on Monday, extending last week’s rally. The fact that major Chinese cities began to relax COVID controls over the weekend helped risk sentiment. The prices of raw materials and oil rise on Monday.
Emerging market currencies rose against the dollar, also supported by higher interest rates. The best performing currencies on Monday are the Russian ruble (USD/RUB down 6.15%) and the Korean won (USD/KRW down 1.75%).
key data
Activity in the US is limited on Monday due to Memorial Day. The key report of the week will be on Friday with the Non-Farm Payrolls report.
In Mexico, the most important event will be Banxico’s quarterly inflation report on Wednesday. “Given recent comments and decisions, we expect the report to lean to the aggressive side. At the May meeting, it raised rates 50 basis points, to 7.0%, by a 4-1 vote, with dissent from Lt. Governor Espinosa in favor of a 75 basis point hike. However, the minutes showed that two other policymakers were open to a larger move,” analysts at Brown Brother Harriman explain. They point out that the next meeting “will be very close between 50 and 75 bp and will depend on how the data comes.”
Technical levels
Source: Fx Street
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