Peso depreciates in context of waiting for US elections, inflation data and Banxico announcement

The Mexican peso depreciated against American dollar this Tuesday. The local currency yielded to a strengthening of the greenback, amid bets related to the midterm elections in the United States and the wait for relevant economic data.

The exchange rate ended this day at the level of 19.5356 units compared to the closing of 19.4494 units yesterday, with official data from the Bank of Mexico (Banxico). The movement meant a depreciation of 8.62 cents for the peso, equivalent to 0.44 percent.

The cross traded in an open range between a maximum of 19.5683 units and a minimum of 19.4338 pesos, its best level since May. The Dollar Index (DXY), which measures the greenback against a basket of six benchmark currencies, was down 0.29% at 109.80 units at the close.

The dollar strengthened earlier due to the lower appetite for risk assets, in a market with a mixed bias due to the US electoral process and upcoming inflationary data, which will be relevant for the decisions of the Federal Reserve and Banxico.

“From a technical point of view, the Mexican peso is trading at overbought levels, which are attractive for the advance purchase of dollars and hedges, while the market awaits the results of the elections in the United States,” explained the local Banco Base in a report.

In the short term, investors expect to know the inflation data for Mexico in October, which will be published on Wednesday, and that of the United States, on Thursday. Banxico’s monetary policy decision will be released on Thursday and another rate hike is expected.

“Despite its decline today, everything indicates that the strong peso could be maintained, between 19.5800 units and 19.6500 units, regardless of the outcome of the elections. A divided Congress would be better for the Mexican currency,” Fintech Mundi explained.

jose.rivera@eleconomista.mx