USD/MXN hits new record highs and retreats

By FXStreet FXStreet (Córdoba) – USD/MXN rose earlier to 17.47 hitting a new all-time high, for the second day in a row. Afterwards it pulled back and it was about to end the day trading around 17.35, below Friday’s closing price. The decline from the highs found support at 17.28.

The pair has risen almost 3% from the level it had a week ago, forcing the Bank of Mexico to introduce extraordinary US dollar auctions several times during the last few days. The decline in crude oil prices and a stronger US dollar boosted the pair.

First the Fed, the Banxico

On Wednesday the Federal Reserve will announce its decision on monetary policy, that could lead to the first rate hike since 2006. Then on Thursday it will be the turn of the central bank of Mexico.

The consensus expect Banxico to follow the Fed and also raise rates. Analysts from TD Securities warn that despite low inflation in Mexico, “Banxico will be concerned that a failure to follow the Fed and hike rates could hit MXN badly. Banxico’s meeting calendar for 2016 suggests that it will remain fairly Fed focused until mid-year, at least in terms of proximity to FOMC meetings, …read more

Source:: FX Street