- Mexican peso and emerging market currencies rise Monday on better weather.
- USD/MXN extends the correction to the 20.30 zone.
USD/MXN is falling again on Monday and hit the lowest level since July 5 at 20.32. Days ago the crossing had come to operate around 9:00 p.m. The better climate in the markets and a general correction of the dollar weakened the cross in recent sessions.
The expectation that the Federal Reserve will raise interest rates “only” by 75 basis points at next week’s meeting helped equity markets rally and also dollar weakness. Added to the above was the stability in Treasury bond yields.
Technically, the USD/MXN bias remains bullish, although the pullback has weakened the dollar. The lows found support above 20.30 and also above the 20-day moving average. Even the cross is trying to get back above 20.45. This level is key since a close below it would leave the Mexican peso with the possibility of continuing to press 20.30 and below.
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The Better weather generally boosts all emerging market currencies. Among those that rise the most is the Chilean peso, which advances 3%. The USD/CLP trades below 950.00, a drop of more than $30, after the intervention of the Chilean central bank and the rise in prices. If the recovery in stock markets and raw materials continues, the recovery in emerging markets could continue to rise.
On Wall Street, the Dow Jones rose 0.62% while the Nasdaq climbed 1.14%. In Europe, the main stock markets are on their way to closing with increases of around 1%.
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Source: Fx Street
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