Headlines from the Central Bank of Mexico Deputy Governor
He adds:
- Peso should be anchored by strong fundamentals, but intervention cannot be discarded in exceptional circumstances
- Mexican monetary policy is likely to be influenced by potential higher pass through from Peso weakness and US monetary policy
- Monetary policy to also be influenced by need to insure recent relative price increases do not lead to 2nd round effects.
The USDMXN moved to new record highs last week as the clock ticks toward president- elects Trumps inauguration.
The pair opened at the lows today and tested the 38.2% retracement of the move up from the end of December low at the 21.4725 level, and the 200 hour MA (green line). Seller could not keep the pair down, and the rest of the day has seen steady sideways trading, followed by a move higher. A trend line has stalled the rally. The trend line, and the 100 hour MA (blue line in the chart below) comes in at 21.7196 area. They are the next target to get to - and through. If the pair is going forward.
The comments from the Deputy Gov. are a warning shot to the market that the central bank is ready and able to a lid on this pair as the clock ticks down. The fight may be a difficult one given the bias of Trump, but they could make speculators more uneasy from the potential volatility.
