USD/MXN gains momentum as investors seek safety amidst US banking sector woes – by christianborjon USDMXN Currencies EmergingMarkets
Bank stock sank in Tuesday’s session. That said, outflows from the emerging market currency seeking safety moved to the US Dollar . At the time of writing, the USD/MXN is trading at 18.1059, shy of the 20-day EMA.US equities are seesawing between gains and losses as tech companies reported earnings that exceeded estimates. However, bank crisis jitters in the US keep sentiment fragile., namely Durable Good Orders for March, jumped by 3.2% MoM, exceeding estimates of 0.7%.
Even though risk appetite improved, as shown by the global equity markets, flows toward safety bolstered the USD/MXN. In addition, recent comments from the Bank of Mexico Governor Victoria Rodriguez Ceja suggest that Banxico could pause the tightening cycle. She said, “We will be evaluating in the next decision, on May 18, these factors and will be discussing whether it’s the moment to stop the increase in rates. We still have to have the discussion with the members of the board.
Lately, inflation in Mexico for mid-April was reported at 6.24% YoY, below 6.52% in March, while Core dropped from 8.03% YoY in mid-March to 7.75%. The market is pricing that Banxico will hold rates unchanged for about six months before cutting 175 bps in the subsequent semester.and Banxico’s pausing, further upside in the USD/MXN is expected.USD/MXN remains downward biased. However, buyers had remained resilient at around the 17.9000-18.
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