- Mexican peso loses strength against the dollar.
- USD / MXN finds a strong barrier at 20.00 and changed a very short-term trend.
The The Mexican peso is trading without significant changes on Tuesday against the dollar after a volatile Monday. The USD / MXN is trading around 20.40 / 45, in slightly positive territory for the day, but far from Monday’s lows.
Optimism over the coronavirus vaccine triggered a strong rally on Wall Street on Monday, and in oil, which moved to emerging markets. At the close of the day, it lost strength favoring a rebound in the USD / MXN.
The cross came to trade at 20.03, the lowest level since March, before rebounding, cutting gains. For now, it is below 20.50, but the intraday tone is bullish. A drop below 20.25 could give the Mexican peso momentum again.
The USD / MXN barrier to break is now 20.00, to enable a bearish extension. In the opposite direction, after 20.50, the next resistance is 20.80 / 85, where a rally above would alleviate downward pressures.
Mexico: inflation rises more than expected
The room for maneuver for Banco de México to continue cutting the benchmark interest rate continues to shrink. Inflation in October rose again, for the third month it was above Banxico’s target and reached the highest level since May 2019.
In October, the consumer price index rose 0.61% and the annual rate climbed to 4.09%, a level not seen since May 2019. Annual core inflation was 3.99% (annual).
As for politics, President Andrés Manuel López Obrador has not congratulated Democratic candidate Joe Biden, possibly seeking not to damage the relationship with President Trump. The presumed defeated in the presidential elections, even if that result is confirmed, has to govern until January 2021 and AMLO will not want to deteriorate relations.
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Credits: Forex Street

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