- The dollar weakens on Thursday as Treasury bond yields decline.
- Mexican peso favored by the context of rising raw materials and shares.
- USD/MXN returns to the range around 20.00.
USD/MXN hit weekly highs at 20.17 but failed to break a key level and embarked on a pullback that is ongoing. It is trading at 20.05, very close to the daily low, with a bearish bias, due to a weak dollar.
A better tone in the equity markets and the recovery in raw materials are helping the Mexican peso. In turn, the dollar corrects downwards after Wednesday’s rise.
Undock?
The deputy governor of the Bank of Mexico, Gerardo Esquivel, considered the possibility of Mexico decoupling from what the Federal Reserve has been doing, arguing that Banxico has been raising the interest rate since before and that inflation is closer to the target than the Fed.
The next meeting of the Fed is on November 2 and that of Banxico on November 10. The US central bank is on track to raise the rate by 75 basis points.
In the US on Thursday there was a larger-than-expected drop in initial jobless claims, but at the same time a smaller rebound in the Philly Fed, which remained in negative territory.
USD/MXN remains in range
The pair threatened to leave the 20.15/20.20 zone behind, but could not break it and therefore continues to move sideways between 20.15 and 19.95. There is intermediate support in the 20.00 area, which if broken would expose the lower bound of the current range. Critical support below is at 19.80.
Technical levels
Source: Fx Street
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