USD/MXN finds support at 19.00, down for the day despite Pemex's concerns


  • Mexican peso rises against US Dollar and erases most of yesterday’s losses. 
  • USD/MXN back to the level it had before Pemex’s plan announcement. 

The Mexican peso dropped modestly yesterday across the board following the presentation of the government plan for Pemex, the heavily indebted state oil company. Today it recovered from the decline, even after warnings from rating agencies. 

Moody’s Investor Services mentioned that the government should significantly increase financial support for Pemex to take its capital investment to levels needed to fully replace its reserves. The company is near to losing its investment-grade rating. Another downgrade from the major rating agencies could force the selling of large amounts of Pemex bonds.

MXN assets remain steady today while the US Dollar dropped modestly across the board amid lower US yields. “Treasury yields slipped after Fed officials reinforced expectations that they would cut interest rates this month and suggested that they are debating the depth of that cut. A sense of renewed uncertainty in global markets was also shown in peripheral risk premiums, as peripheral risk premiums halted its downward trend,” wrote BBVA analysts. 

USD/MXN back to 19.00 

The pair bottomed today at 18.99 and then bounced to the upside, to the 19.05 near Wall Street’s closing bell. The recovery of the Mexican peso was capped by the 19.00 area. USD/MXN continued to move in a wide range between 19.30 and 18.90. A break to the upside would clear the way for a rally to 19.45/50 while under 18.90 a test of 2019 lows seen at 18.75 seems likely. 
 

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