- US Dollar rises against Emerging market currencies on risk aversion.
- Mexico: CPI data on Thursday and Banxico next week.
The USD/MXN pair moved on Wednesday from the weekly bottom to the top in a few minutes. It dropped toward the 19.50 support area and then rose sharply to 19.74, matching the eight-week high it reached yesterday.
EM pressures ease as Wall Street rebounds, crucial days ahead in Mexico
The pair rallied earlier today when equity prices across the globe bottomed on the back of global growth concerns, affected by the escalation in trade tensions between the US and China. Emerging market currencies continue to decline against the US dollar, excluding the Turkish Lira, amid the risk-off environment.
In Mexico, the economy shows a near-zero growth rate, and the outlook turns worst every day. On Thursday, July CPI data is due, and analysts expect it to show a decline in line with the Bank of Mexico projection. Banxico’s key interest rate stands at 8.25%, the highest in a decade. With practically no growth in the economy and inflation trending lower, a rate cut from Banxico near year-end was seen. Some analyst point out the central bank could move to a dovish tone at the next meeting. The recent slide of the Mexican peso against the US dollar and volatility creates a dilemma for the central bank. Next week is the Board meeting.
A new range?
The USD/MXN pair is moving at the moment in a new higher range between 19.50 and 19.75. To the upside, the critical level is seen at 19.80. A close on top would likely favor further gains and point to a test of the key psychological level of 20.00.
On the flip side, under 19.45/50 the bullish pressure will likely ease, but the bias to the upside will probably remain in place as long as USD/MXN holds above 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
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.