NFP Miss Helps USD/MXN Break Decrease, Banxico Assembly in Focus

USD/MXN Forecast: Bearish

An enormous miss on the US jobs knowledge printed on Friday helped USD/MXN get again under the 20 pesos mark. April’s non-farm payrolls had been forecasted to return in scorching at over 900okay jobs added after the ADP knowledge launched on Wednesday had proven over 700okay personal payrolls added final month. However the precise determine got here in at simply 266okay, a robust disappointment for markets, which noticed the greenback dip decrease.

USD/MXN had been making an attempt to interrupt decrease the remainder of the week, but it surely wasn’t till the US Greenback bought hit on Thursday that the pair managed to achieve bearish momentum. The was additionally the Mexican CPI knowledge printed on Friday noon, which confirmed that costs rose 0.37% within the month of April, taking the year-on-year determine to six.08%.

Each readings had been above expectations and put additional strain on Mexico’s Central Financial institution (Banxico) to begin contemplating the rise in inflation in its financial coverage conferences. The subsequent assembly is scheduled for this coming Thursday (Might 13), with most analysts predicting an unchanged price at 4%. As acknowledged earlier than, a extra hawkish Banxico and a potential rise in charges can be constructive for the Mexican Peso, which might probably see renewed carry commerce inflows.

Aside from that, I anticipate USD/MXN to proceed to be delicate to USD flows, with bond yields persevering with to be a robust focus for buyers.

USD/MXN Ranges

USD/MXN bulls had been in a position to take the pair increased to finish the month of April, marking a month-to-month excessive at 20.3280. This allowed Mexican Peso consumers to enter at a extra favorable stage as USD/MXN continues to float decrease. The important thing problem now shall be gaining sufficient momentum to interrupt under key help vary at 19.87-77. In that case, then the pair is more likely to have a transparent path decrease in direction of 19.53, the place the subsequent help comes into play. On the upside, the 50-day easy transferring common (20.27) is more likely to supply resistance within the brief time period, adopted by the latest excessive of 20.32.

USD/MXN Day by day chart

Fibonacci Confluence on FX Pairs

— Written by Daniela Sabin Hathorn, Market Analyst

Comply with Daniela on Twitter @HathornSabin