- US Dollar tumbles after comments from Fed’s Williams.
- Mexican peso hits highest since Monday, eyes weekly highs.
The USD/MXN pair was trading lower on Thursday but it accelerated the decline during the American session on the back of a broad sell off of the US Dollar, triggered by monetary policy expectations.
Fed’s Williams commented that it is better to take preventative measures on interest rates “than to wait for disaster to unfold”. According to him, structural factors might be causing a decline in inflation expectations. Williams warned that the risk of lower interest rates for a long period of time include asset bubbles and excessive credit.
After his comments, Fed's Clarida, cited by Reuters, said the US economy is in a good place but uncertainties have increased. He added the Fed will act as appropriate to keep the economy growing. Regarding policy, mentioned “you don’t want to wait until data” turns decisively negative.
Williams and Clarida’s words reiforced expectation of a rate cut from the Fed, at the next meeting in two weeks, pushing the dollar and US yields to the downside. USD/MXN dropped from 19.02 to 18.94, reaching the lowest since Monday and is back near the lows of the last three months.
Recent moves in USD/MXN are all about the US Dollar. The Mexican peso continues to resist despite concerns about economic confidence and Pemex’s plans. The Mexican government announced how it will support the state oil company over the next three years, failing to gain broad support from markets.
USD/MXN Levels to watch
On the downside, the next key support is seen around 18.90. A daily close below would expose 2019 lows located at the 18.75 zone. On the upside, the pair needs to rise back above 19.00 to remove the bearish pressure. The key resistance area is the upper limited of the current wide range 18.90/19.30.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.