- Mexican peso remains steady after changes at the Finance Minister and at Banxico.
- New Banxico Governor warns that inflation may not fall as forecast.
The USD/MXN pair remains near the lowest levels in more than a month. It is hovering slightly above 18.50 after falling on Monday to 18.44. It is trading between two technical areas 18.50 and 18.70, consolidating a 4% decline from November highs.
Changes at Banxico and at the Finance minister
The Mexican peso remained steady, holding firm to monthly gains after a cabinet reshuffle. President Peña Nieto named Alejandro Díaz de León, a deputy governor of the Bank of Mexico as the next governor. Agustín Carstens is leaving his position tomorrow to run the Bank for International Settlements.
José Antonio Meade, resigned on Monday as Mexico’s finance minister and announced his intention to run for president in next year’s election for the ruling party, the Institutional Revolutionary Party. The new finance minister is Jose Antonio Gonzalez Anaya.
In his first interview after being nominated as Banxico governor, Diaz de Leon mentioned that inflation may not fall as forecast because of recent and future shocks. “We cannot assume that the disinflationary path will necessarily go as expected. Actually, we have already highlighted in the last inflation report and the last monetary policy communique that the outlook for inflation has deteriorated in the last months”, he said.
The latest growth report showed that the Mexican economy contracted 0.3% during the third quarter and expanded 1.5% versus the same quarter of last year.
“Added uncertainty regarding the future of NAFTA is having its effects on investment in the country and this could jeopardize economic growth further during the last quarter of the year and into next year. Furthermore, the fact that Andrés Manuel López Obrador (AMLO) is leading the presidential polls ahead of next year’s presidential elections is probably injecting more uncertainty in an already uncertain environment for the Mexican economy and its insertion in the North American market”, mentioned analysts from Wells Fargo.
USD/MXN Technical levels
To the downside, a consolidation below 18.50 would open the doors for a slide toward the next support area seen at the 18.30 zone; below the next support might lie at 18.15. On the upside, the immediate resistance lies at 18.68/70 (Nov 23 & 24 high, 32.8% Fibonacci retracement of last rally), 18.90 (Nov 2 & 17 low) and 19.05.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.