- Mexican peso erases daily losses, still remains under pressure after UrzÃºa’s resignation.
- US Dollar drops across the board after Powell’s comments.
The USD/MXN pair continues to show high volatility levels following the resignation yesterday of the Finance Secretary, Carlos UrzÃºa. It jumped to 19.36 on Tuesday and then pulled back to 19.10. Today it tested again the 19.30 area but failed to break higher and pulled back.
As of writing, it was trading at 19.16, modestly higher for the day. It appears to be stabilizing significantly above the level it had before UrzÃºa’s resignation when USD/MXN was testing monthly lows below 18.90.
The bearish pressure on MXN eased after Mexican President LÃ³pez Obrador announced Carlos Herrera as new Finance Secretary. He offered a press conference and reaffirmed the commitment to fiscal discipline. Still, the departure of UrzÃºa created concerns among investors about AMLO’s policies. The former secretary mentioned “extremism” in economic policy in his resignation letter.
The Mexican peso today was still under pressure, but USD/MXN managed to remain below 19.30. A weaker US Dollar eased the bullish tone. The greenback dropped after Federal Reserve Chair Jerome Powell suggested that the central bank is prepared to “act as appropriate” to sustain economic growth. Also higher equity prices and lower US yields limited the upside in USD/MXN.