- 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.