USD/MXN hits 2-week highs, near 19.00
- US dollar up against emerging market currencies ahead of NFP and FOMC meeting.
- MXN drops to lowest in two weeks.
- A new rate hike from Banxico more likely after latest inflation data.
The USD/MXN pair continued to rise on Thursday and reached 18.99, the highest level in two weeks. Afterwards pulled back and it was at 18.90, consolidating weekly gains. The pair is being supported by a stronger US dollar. The greenback rose across the board and particularly against emerging market currencies, including the peso.
The short-term outlook continues to favor the upside in USD/MXN. It broke the 18.90 resistance and now is testing the 19.00 zone. The mentioned area could limit the upside in the short-term but if it rises on top, it could lead to a rally to 19.30 (intermediate resistance at 19.15).
Mexico: Inflation accelerates
Data released today showed that inflation accelerated for a second straight month in November. The annual rate reached 6.63% up from 6.37% and slightly below the 6.66% 16-year high of August.
The rebound in inflation coincides with a depreciation of the Mexican peso. Next week, one day after the FOMC meeting, Banxico will make its decision. It will be the first meeting presided over the next governor Alejandro Díaz de Leon. A while ago expectations were title toward Banxico keeping rates unchanged, but today’s data, adds pressure on the central bank to act and now a rate hike seems likely.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
