The USD/MXN price declined sharply today after the relatively strong Mexican jobs numbers and the potential for rate hikes. It dropped to 20.2913, which is 6% below the highest level this year.
Strong Mexican data
The Mexican economy saw a substantial increase in demand in the fourth quarter. According to the country’s statistics agency, the aggregate demand rose by 4.8% in Q4. This led to an annualised decline of 5.10%, which was better than the previous quarter’s decline of 11.4%. It was also better than the median estimate of a 10.5% decline.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
In the same period, the country’s private spending increased by 5.30% leading to a year-on-year decline of 7.2%. Analysts at key forex and CFD brokers expect that the Mexican economy will rebound later this year.
For one, as one of the biggest US trading partners, the country will benefit from the recent stimulus package offered by the government. For one, many immigrants will send some of their stimulus checks back home. Also, higher crude oil prices will support the economy.
The USD/MXN price also declined as investors start pricing-in a rate hike by the Mexican Central Bank. In the past two days, the Bank of Russia, the Turkish Central Bank, and the Brazilian central banks have hiked rates to tame inflation. The same will likely happen in other EM countries like Mexico and South Africa. In Mexico, consumer prices rose to 3.76% in February.
The pair is falling as the US dollar strengthens against other developed country currencies like the euro and sterling as US Treasury yields rise.
eToro:
visit & create account
USD/MXN technical prediction
The USD/MXN price has been in a sharp downward trend recently. It has fallen by more than 6% from the highest level this year. It is now slightly above this week’s low of 20.27. Also, it has moved to between the lower and middle lines of the Bollinger Bands while the Stochastic Oscillator has dropped below the oversold level. Therefore, the pair may keep dropping if bears manage to move below the support at 20.27.
Source link