Mexico’s inflation continues to rise despite interest rate increases USD/MXN
At Mexico’s last central bank meeting on September 30th , Banxico hiked interest rates from 4.5% to 4.75% and said that the recent rise in inflation is transitory (like so many other central banks around the globe). They also stated that they expect inflation to converge to their 1%-3% target within the horizon forecast. Today, Mexico released its mid-month Inflation Rate for October. (Mexico is one of the few countries that releases a mid-month and a final inflation report.) The YoY headline inflation number for mid-month October rose to 6.12% from 5.87% in September, moving above April’s high of 6.08% and reaching its highest level since 2017. Early this year, the Bank if Mexico had said they has hoped inflation would be within target by the end of the year, however inflation continues to move further away from the 1%-3% area! Banixco meets again on November 11th.
Trade USD/MXN now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
USD/MXN has been holding above a key support zone between 19.5481 and 19.7464 since December 2020. Every time price had reached that zone, it bounced, putting in a lower high. On September 28th, USD/MXN finally broke out above the downward sloping trendline dating back to June 30th, 2020. The pair traded just short of previous horizontal support (now resistance), and is now at a large confluence of support between 20.2217 and 20.1000, which includes:
- Horizontal support
- 50 Day Moving Average
- 200 Day Moving Average
- The downward sloping trendline from June 30th, 2020
Source: Tradingview, Stone X
On a 240-minute timeframe, USD/MXN is also just beneath the 61.8% Fibonacci retracement from the lows of September 13th the highs of October 12th, near 20.2525. If price can hold above 20.1000, it could bounce significantly. First resistance above 20.2525 is horizontal resistance at 20.5071 and then the October12th highs near 20.9031. However, if traders continue to worry that Banxico is wrong, and that inflation won’t retreat t their 1%-3% target, USD/MXN could continue lower. Support is back at the 19.5481-19.7464 area, where buyers are sure to be sitting, looking for another bounce off the support zone.
Source: Tradingview, Stone X
Although Mexico’s central bank continues to raise interest rates, inflation continues to rise as well. Banixco continues to see the inflation as transitory and feels it will fall to their forecasted target range of 1%-3%. The question is, “How much higher will the central bank need to raise rates before inflation begins to level off?”. Banixco doesn’t meet again until November 11th. Traders will find out then if the rate hikes will continue.
Learn more about forex trading opportunities.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024