- Mexican peso jumps across the board ahead of Sunday’s election.
- USD/MXN drops more than 2%, on the worst day in months.
The Mexican peso is rising sharply on Thursday, gaining more than 2% against the US dollar. USD/MXN is falling more than 2% and trades at the lowest level in four weeks.
The pair opened the day above 20.15, consolidating after posting gains yesterday amid some tensions across Emerging Markets. It started to move lower, gaining more speed hour after hour. It is trading at 19.72, the new low, consolidating important losses.
The rally of the Mexican peso takes place just a few days ahead of the presidential election. The left-leaning candidate Andres Manuel Lopez Obrador is leading the polls with a significant advantage. Market has priced in a victory on Sunday from AMLO. Attention is likely to focus on his cabinet choices afterward. The inauguration will be December 1.
Last week, the Bank of Mexico rose the key interest rate to 7.75% amid rising concerns about the impact on inflation of the depreciation of the peso. Since then, the currency gained 3.2% versus the US dollar.
USD/MXN Levels to watch
To the downside, immediate support is seen at 19.70, followed by 19.45/50. On the upside, now resistance could emerge at 19.85/90 and then 20.15 and 20.25 (Jun 27 high).
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