The US Dollar Finds Footing

Mexico reports domestic auto sales, and the central bank releases its inflation report. The peso's weakness (-2.3% over the past month) has given the market pause. It had been leaning toward a rate cut at the March 25 Banxico meeting, though our leanings had been for an April move. Late yesterday, the Senate passed a controversial bill that favors the state electricity company over private-sector renewable companies. It has already been approved by the lower chamber. It is part of President AMLO's efforts to unwind the reforms that had opened Mexico's energy sector to foreign investors.

The US dollar remains in the range it recorded last Friday against the Canadian dollar (~CAD1.2590-CAD1.2750). Its third day of decline has brought it to the lower end of that range. A break of CAD1.2575 is needed to signal the likely return to last week's low near CAD1.2465. On the other hand, a move above CAD1.2650 could spur a test on the CAD1.2700, and a break of it would lend credence to ideas that the greenback's losses this week have been corrective in nature. Similarly, the US dollar remains confined to last Thursday's range against the Mexican peso (~MXN20.37-MXN21.03). It has found support around MXN20.55. Initial resistance is cited in the MXN20.70-MXN20.75 area today.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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