- USD/MXN falls sharply from weekly highs.
- The Mexican peso is favored rebound in stocks and raw materials.
- Banxico is expected to raise 75 basis points on Thursday.
USD/MXN is trading around 20.15, having bottomed Thursday at 20.10, the lowest level in six days. A few hours ago, the pair was trading at 20.57, the highest since early August. In hours, Banxico’s decision.
The volatility remains elevated in global financial markets amid fears about the global state of the economy and the future. On Wednesday, the Bank of England (BoE) shook the markets by announcing temporary purchases of bonds, after the dramatic fall in their value.
What the BoE did ended up favoring a rise in stock markets and a decline in sovereign bond yields. It also led to an upward correction in raw materials. All of this favored emerging market currencies, including the Mexican peso.
On Thursday, the third estimate of GDP growth was published in the US, which did not generate surprise, and the weekly report on requests for unemployment benefits, which showed better-than-expected data, which gave the dollar a momentary air.
In the afternoon, the Bank of Mexico will announce its monetary policy decision, which is expected to be a rise of 75 basis points, to match what the Federal Reserve did last week and mainly due to the fact that inflation in Mexico remains above 8%, very far from the target of the central bank.
Technical levels
Source: Fx Street
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