USDMXN
USDMXN trades 0.40% lower at 19.2365 close to daily lows after the Central Bank of Mexico cut interest rates by 25 basis points to 7.5% for third consecutive meeting as widely expected by markets; two members wanted a 50 basis point cut. Banxico noted that in the presence and possible persistence of factors that involve risks to inflation and its expectations, the monetary policy will be adjusted to achieve the convergence of inflation to its target range. I believe that Banxico will continue in that direction with one more rate cut in the next policy meeting.
On the data front, the US advance retail sales for October came in at 0.3% above expectations of 0.2%, the Retail Sales Control Group came in at 0.3% in line with forecasts. The NY Empire State Manufacturing Index came in at 2.9 below expectations of 5 in November.
Last week the Mexico Core Inflation came in at 0.25%, below forecasts of 0.29% in October, the 12-Month Inflation came in at 3.02% topping expectations of 3%. The Mexico Consumer Confidence dipped from previous 45.3 to 44.1 in October.
On the technical side, the USDMXN momentum turns negative today for the short term as the pair trades below all major daily moving averages. On the downside, first support for the pair stands at 19.2018 today’s low and then at 19.053 the low from November 4th. In case of a break below that level the way to 18.8735 July lows will be open.
On the upside, immediate resistance stands at 19,3297 today’s high, next resistance is at 19.3560 the 50-day moving average, while more offers will emerge at 19.3854 the 100-day moving average.
Traders must watch the crucial 19.00 mark; a daily close below could trigger more losses toward the YTD lows at 18.74.