USD/MXN rises further to 24.61; Mexican peso is the worst-performing EM currency

• USD/MXN jumps to 24.61 and holds above 24.50 as MXN leads FX lower. 
• Mexican Manufacturing PMI: Fastest output contraction for three months.

The USD/MXN has been rising constantly in the European session. Recently it spiked to 24.61, hitting the highest level in a week. As of writing, trades at 24.55, up 3.45% for the day. 

The Mexican peso is the worst performer on Wednesday, it remains under pressure amid risk aversion. Domestic factors, the decline in crude oil prices, US restrictions and the fly to quality weighs on MXN. 

Mexico’s President Lopez Obrador said on Wednesday he met with Bill Newlands, CEO of Constellation and that they accepted the outcome of a vote to cancel a brewery being built north in Mexico. AMLO said the government will compensate the company. Regarding the impact from the coronavirus, AMLO warned again about no bailouts and no tax forgiveness, adding he needs collection for social programs. 

Mexico: PMI drops sharply in March

The seasonally adjusted IHS Markit Mexico Manufacturing Output Index dropped from 50.3 to 46.9 in March, the lowest reading in three months. The new orders component dropped at the sharpest rate in surrey’s history while business sentiment hit a record low. 

“Mexican manufacturers recorded a fresh decline in output during March as demand tumbled amid the ongoing coronavirus outbreak. New orders fell at the quickest pace since data collection began in April 2011, prompting firms to accelerate staff cuts and reduce purchasing activity. Meanwhile, firms were pessimistic towards the 12-month business outlook for the first time on record”, the report mentioned. 

"The Covid-19 pandemic has severely disrupted the global economy in March and the picture was no different in the Mexican manufacturing sector. Marked declines in both production and new orders were accompanied by a sharp deterioration in vendor performance, making business conditions extremely difficult” mentioned Eliot Kerr, Economist at IHS Markit. He warned the fall in Mexican factory production in March, “though marked, was disproportionate to that seen in new orders and suggests we will see further output reduction as supply is pared back to match the dire demand environment."

Technica levels