- The Mexican peso plummets against the US dollar after the NFP report.
- Within a few hours, the USD/MXN erased the weekly losses and climbed back above the 20.70 zone.
- Next week’s events include the Banco de México meeting.
The USD/MXN jumped to 20.78 after the release of a better-than-expected NFP report. The dollar soared after the report, also supported by rising US yields.
Friday’s US figures triggered a broad-based rally in the US dollar, pushing USD/MXN sharply higher, paring weekly losses. The recovery of the Mexican peso has come to an end. A drop below 20.70 should put the pair back in the 20.70/20.50 range.
After a busy week, with key employment data in the United States, attention now turns to Banxico, which will have its board of directors next week. Also the numbers of the IPC of Mexico.
“We expect Banxico to rise 25bp. This meeting has a relatively high degree of uncertainty, thanks to the new structure of Banxico’s board, since the new Governor chairs her first meeting. We believe that there is not an insignificant risk that Banxico could rise again 50 bps, since it would be justified by the dynamics of inflation”, said analysts at TD Securities.
What the central bank says could influence the Mexican peso. Although its performance is likely to be boosted by risk sentiment in the financial markets.
“Although we maintain our view of the USD/MXN much higher for the rest of the year, the risks associated with other regional currencies during the first half of 2022 should favor the peso in the short term, keeping the USD/MXN within the range 20.30 – 9:00 p.m. ”, CIBC analysts explained.
Additional technical levels
Source: Fx Street
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