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  • US Dollar rises sharply against emerging market currencies, Latam under-perform.
  • USD/MXN gains 1.75% over the last two days.  

The USD/MXN jumped during the American session, breaking above 19.50 and peaked at 19.60, the highest level since January 4. The pair holds near the top, consolidating gains. During the last 48 hours gained 1.75%.  

Earlier today, USD/MXN approached 19.30 before turning again to the upside. Not even positive inflation data from Mexican eased the bullish pressure.  

The move to the upside is being driven by a stronger US dollar across the board and particularly against emerging markets. Today it resumed the rally after the ECB meeting.  

The DXY (measures the US dollar against majors) rose from 96.80 to 97.50, the highest since mid-December and it is on its way to the second strongest close since 2017. The worst global performer on Thursday is the Argentina peso (USD/ARS +4.30%), followed by the South African rand (USD/ZAR +1.85%) and the Brazilian real (USD/BRL +1.55%).  

Mexico: Inflation at lowest since December 2016

Positive data from Mexico did not help the MXN versus the US dollar. The annual inflation rate slowed from 4.37% to 3.94%, to the lowest level since December 2016. The CPI index dropped 0.03% in February compared with the previous month.  

With the slowdown in inflation reaffirmed, expectations about when the Bank of Mexico could lower interest rates will gain momentum, particularly if the Mexican peso remains steady.