USD/MXN rises to 6-day highs, finds resistance at 18.95

The Mexican peso today is among the worst performers in the currency market despite the rally in crude oil prices. USD/MXN is rising today 0.80% recovering after falling last week to 18.60, the lowest level since November. 

Today the pair reached 18.94, a 6-day high and then pulled back. It was trading at 18.80/85, consolidating gains. Despite today’s rebound, USD/MXN is still moving with a bearish bias. 

Banxico and data

Last week, the Bank of Mexico rose the key interest rate by 25bp to 6.5%, the highest level since 2009. The central bank left the door open to more hikes. The next meeting will be in May and what happens, is likely to be defined by inflation, the exchange rate, and economic activity. 

Regarding data, yesterday the Markit Mexico Manufacturing PMI index for March was released. Ir rose to 51.5 from 50.6, signaling a modest improvement in overall business conditions. The report showed input price inflation easing further from January’s five-year peak.

Tim Moore, a senior economist at IHS Markit and author of the report, affirmed: “March’s survey data reveals that subdued business conditions persisted in Mexico’s manufacturing sector, but there were signs of a recovery from the three-year low seen at the end of 2016. A modest rebound in the Manufacturing PMI was driven by stronger new order books and a marginal upturn in production volumes in March.”

Tomorrow consumer confidence data will be released and on Friday the CPI index for March, that is expected to show an annual rate of 5.30%.