- The USD/MXN renews the minimum of six months in 19.46.
- The US dollar recovers land after US data.
- Trump’s turn with respect to China and Fed benefits the Mexican weight.
- The retail sales of Mexico fall 1.1% per year in February.
The USD/MXN began on Wednesday testing a daily maximum of 19.65 but was giving ground during the day, until the American opening to a new minimum of six months in 19.46. The US data of the manufacturing PMI and new housing sales reduced the fall minutes later.
The price of the US dollar is now quoted against Mexican peso over 19.58, losing 0.16% in the day.
Donald Trump’s posture change compared to China and Fed favors Mexican weight despite the USD’s rebound after US data.
The American dollar index (DXY) has turned positive in the last hour, rising to a week of one week at 99.88 after the publication of the United States data, which have shown strengthening in the manufacturing sector and in the sales of new homes.
Just a few minutes before the data, the Wall Street Journal revealed that the government of US President Donald Trump was considering lowering tariffs to China, pointing according to their sources to a 50%-65%tariff. This information has favored Mexican weight, since it opens expectations of a broader tariff reduction in the coming weeks.
The news of the Wall Street Journal is in line with the statement that Trump made yesterday before the press ensuring that the negotiations with China were going well. The president also reduced the market voltage by ensuring that He won’t say goodbye to Jerome PowellPresident of the Fed, despite not agreeing with his policy not to cut interest rates.
In the front of the data, the PMI manufacturing of the USA Published by S&P Global has shown a strengthening of the sector in the preliminary reading of April. The indicator has risen to 50.7 points from 50.2, improving the estimated 49.4. The services sector weakened more than expected, on the other hand, but continued in expansion territory.
On the sales of new homes in the US, the growth was 7.4% in March, exceeding the increase of 3.1% of February.
In Mexico, retail sales fell 1.1% per year in February After growing 2.7% in January, while increased a monthly 0.2%.
USD/MXN Price levels
The USD/MXN trend remains firmly bassist in the short term, although the relative force index (RSI) of 14 in time graph indicates that the correction of the last hour could extend a little more. The daily RSI, on the other hand, points out that there is more space to fall.
If the fall continues below the minimum of today in 19.46, the first important support waits on 19.11/19.06, soils of October and September 2024. A break in the psychological zone of 19.00 could lead to the torque towards the surroundings of 18.40, where it is the minimum of August.
Upwards, the first resistance awaits in the mobile average of 100 periods in time graph, around 19.67. Above, the level to exceed is the maximum of this week reached yesterday Tuesday at 19.76. An upward breakdown of the region of 20.00 could lead to the torque to the mobile average of 100 in daily graph at 20.33.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
