USD/MXN jumps to 20.40, up 5% in 3 days

• MXN assets remain under pressure amid investors concerns on AMLO’s policies.  
• US dollar accelerates and rises to 4-month highs in Mexico.
• MXN continue to underperform, worst EM currency in October.  

The Mexican peso continued to slide against the US dollar and hit the lowest since mid-June. The USD/MXN resumed the move to the upside after a modest pause yesterday and jumped to 20.46 before pulling back to the 20.30.  

The pair is about to post the highest daily close since June 20 and still hold a strong bullish tone, despite overbought readings in technical indicators. Since the beginning of the week is up by 5% and almost 9% for the month.  

The Mexican peso was the worst performer among the most traded currencies in the world during October. Most of the losses took place after the “citizen consultation” about the New International Airport of Mexico. President-elect Andres Manuel Lopez Obrador announced the cancellation of the new airport under construction and triggered concerns about his future policies.  

Mexican bond yields jumped with the 10-year hitting 9%, the highest level in almost 10 years. If the depreciation of the Mexican peso continues, the central bank could raise interest rates in order to keep inflation expectations anchored.  

USD/MXN Levels to watch  

A consolidation above 20.30 would keep the bullish tone intact. The next strong resistance area is seen at 20.50 followed by 20.65. On the flip side, now 20.05/10 is the immediate support and then 19.90 and 19.60/65. vvvvv