- Risk aversion on Monday continues to weigh on risk-sensitive currencies.
- US Dollar Index erases early losses, climbs above 98.
- Mexico’s Obrador says stimulus for companies is not contemplated for the time being.
The USD/MXN pair gained more than 4% on Monday to touch a fresh all-time high of 23.0815 in the early trading hours of the American session as risk-sensitive currencies, such as the Mexican peso, remain under pressure amid coronavirus fears. Although the pair pulled away from its peak, it still adds 3.6% on the day at 22.7050.
Flight-to-safety hurts MXN on Monday
Earlier in the day, the pair lost its traction and dropped to 21.3520 with the initial reaction to the Federal Reserve’s emergency 100 basis points rate cut. However, with the surging number of confirmed coronavirus infections globally forcing investors to seek refuge, the pair rose sharply.
Meanwhile, commenting on the volatility in the foreign exchange market, “if we have problems with debt due to peso depreciation, we would make some adjustments, but not to welfare programs,” Mexican President Obrador said on Monday.
“The stimulus for companies is not contemplated at present,” Obrador added to further weigh on the MXN and noted that they welcome decisions made by US financial authorities to combat coronavirus threat.
On the other hand, the USD seems to be capitalizing on risk-off flows in the second half of the day to keep the pair’s bullish momentum intact. At the moment, the US Dollar Index, which touched a daily low of 97.45, was at 98.30, still 0.4% below Friday’s closing level.
Technical levels to watch for
Share
