- The USD/MXN records losses on Thursday and maintains the low -term bassist trend.
- The American dollar weakens after the denial of the US Secretary of the Treasury about the reduction of tariffs to China.
- Focus on the inflation fact of Mexico of the first half of April.
The Mexican peso is strengthened on Thursday against the US dollar, causing a drop in the USD/mxn to 19.57, minimum of the day. At the time of writing, the par quotes about 19.58, losing 0.23% daily.
The new words of the US Treasury Secretary weigh on the dollar
The US dollar index (DXY) records losses this Thursday due to the renewed commercial uncertainty between the United States and China. The index has decreased from 99.90 to 99.30 and operates at this time over 99.39 points, giving 0.51% in what we have been working on.
Yesterday the Wall Street Journal said that the US government could reduce tariffs to China to 50%-65%, which promoted market optimism. Later, US Secretary of State, Scott Besent, denied this news, ensuring that there was no ‘unilateral’ offer to cut the rates to China, pointing out that both countries would have to reach a mutual agreement to progress in conversations. This information weighs on the feeling of the operators this Thursday, affecting the dollar due to the fears of lack of agreement between both powers.
In the next few hours, the operators will be aware of the economic data of the United States, which today will publish the requests for lasting goods in March, waiting for a 2% increase compared to 1% of February, and the weekly requests for unemployment subsidy, which are estimated to rise to 221,000 from the previous 215,000. The sales of existing housing will also be announced, which is projected, 3% will fall in March, and the manufacturing activity of the Kansas Fed.
Mexico puts the focus on the inflation figures of the first half of April
In Mexico, the focus will be today in the inflation data of the first half of April. For the general consumer price index, a 0.04% drop is expected compared to the increase of the previous 0.14%. Regarding the underlying IPC, a 0.20% rise is expected after the increase of the previous 0.24%.
A considerable surprise in the inflation data could give a boost in the Mexican weight. With Banxico pointing at his last meeting to continue with the cuts of interest rates, a fact equal to the expected is already discounting, so he will not cause any significant movement, while a greater softening of prices could weaken in a very short term to the MXN.
USD/MXN Price levels
The USD/MXN tendency remains firmly bearish in the short term, with the relative force index (RSI) of 14 in a time and daily graph below 50, pointing out more space to fall in the next few hours.
If the fall continues below the minimum of yesterday in 19.46, the first important support will wait on 19.11/19.06, October soils 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 lowest level of last August.
Upwards, the first resistance awaits in the mobile average of 100 periods in time graph, around 19.65. Above, the level to exceed is the maximum of this week reached on 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.
