Confident consumers push MXN higher Confident consumers push MXN higher Confident consumers push MXN higher

Confident consumers push MXN higher

Forex 4 minutes to read
MO
Michael O’Neill

FX Trader, Loonieviews.net

Summary:  The Mexican peso gained some ground versus King Dollar today on the back of a strong February consumer confidence print, but the key factor remains central bank policy and the next crucial print is February inflation on Thursday.


Mexican consumers are feeling confident. The National Institute for Statistics and Geography said this morning’s Consumer Confidence index was 116.8 compared to 111.9 in January. USDMXN dropped on the news.

On March 2, Standard and Poor’s trimmed Mexico’s credit rating outlook from stable to negative while leaving the BBB sovereign rating intact; this was expected. S&P blamed increased government spending on Pemex (the national oil company), which could impair the government finances, for the rating adjustment. That shouldn't have been a surprise as last week the Bank of Mexico (Banxico) warned that Pemex’s $100 billion debt could put pressure on its ratings, and it looks like they were right. Banxico also cut the 2019 GDP growth forecast from 2.2% to 1.6%, the third consecutive quarterly cut. 

Mexico February inflation data is due on Thursday and expected at 4.48%. The central bank is targeting 4.1% inflation for Q1. Some analysts believe that the mix of lower growth and softer inflation would let Banxico reverse December’s 0.25 basis point interest rate increase, bringing its benchmark rate back to 8.0%.

USDMXN peaked at 20.6350 in December and plunged to 18.8800, coinciding with a steep plunge in oil prices. Since then, the currency pair has been in an 18.8800-19.4660 trading range with a bullish bias as the uptrend line from April 2018 is intact while prices are above 19.000.

FX markets were roused from a deep slumber when US ISM non-manufacturing PMI and New Home Sales beat forecasts. NZDUSD was the biggest loser since the open, followed closely by GBPUSD. EURUSD dropped from 1.1330 to 1.1307 with technical traders looking for a break of 1.1280 to fuel losses to 1.1190.

Wall Street largely ignored the US economic data. The three majors are very close to unchanged as of 14:05 GMT, with traders waiting for US/China trade talk updates and Thursday’s Federal Open Market Committee meeting.
US Oil and USDMXN
US Oil and USDMXN (source: Saxo Bank)

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.