The Mexican peso is rising against the US dollar on Wednesday for the fourth day in a row and today it reached a fresh 2016 high. A weak greenback and risk appetite pushed USD/MXN sharply to the downside.
The pair that in February reached a record high at 19.44 (intraday), recently hit 17.16, the lowest level since December. Currently it trades at 17.21/23 and continues to point to the downside. Now it is flat for the year, after erasing a 12% gain.
Banxico and the Fed
Yesterday’s comments from Janet Yellen pushed market expectation of the next rate hike further to the future. It the Fed remains on hold, the central bank of Mexico is likely to do the same.
“We believe that the health of the US domestic economy is overstated and believe that no further rate hike will happen this year. The dovish stance is clearly retreating and unfortunately for Mexico, we should therefore see further weakening in the USDMXN”, said Yann Quelenn, Market Analyst at Swissquote.
(Market News Provided by FXstreet)