2020-02-14 • Updated
Performance in 2020: -2%
Last day range: 18.5657 – 18.6048
52-week range: 18.5680 - 20.2528
The USD trades at 18.5740 against the Mexican peso – that's the lowest the USD/MXN has been to since October 2018.
Yes, the Mexican peso. Unfortunately, time and intensity of global events, like the Coronavirus disturbing the world, do not let us pay as much attention to the exotic currencies as they deserve. However, we will try to correct this oversight now and give you more space for trading maneuvers and operate more exotics. Therefore, peso now.
Banco de Mexico cut the rate to 7%, making it the fifth in a row rate reduction. Given the fact that its inflation is the highest among the G-20 member countries and goes ahead of the domestic economic growth, the Mexican financial authority has a lot of space for monetary easing. In fact, observers comment that the end of 2020 is likely to see the rate cut to 6%.
Yes, you are right. Normally, if the central bank of a country applies monetary easing and expands the influx of national currency in the market, the value of the currency drops. Especially, against such strong counterparts like the USD.
But the case of the Mexican peso is a bit special, that’s why it doesn’t follow the general rule. Primarily, that’s for certain fundamental reasons.
First, the US-China trade war has ended. We have already forgotten about that, but this has been in place for two years – compare that to the Coronavirus which has been out there for merely a month. The proportion of the impact is relative to its duration. Peso is a risky asset against the US dollar, and even with the Coronavirus raging around, the markets do not take that as a reason to get depressed. The impression is mixed, at most. That’s why the liberation of the market from the risk-avoiding mood over the US-China trade agreement still has its lasting effect and supports the MXN.
Second, during his recent speech in Davos, US President Donald Trump has underlined the new trade agreements with other countries. He specifically stressed on the new Canada-US-Mexico agreement replacing NAFTA. For Mexico, which has been suffering from disappointing economic dynamics these years, that should sound optimistic in the promise of future investments and refreshed trade flows. Once again, that supports peso.
Don’t get carried away too much. Yes, there are fundamentals supporting the Mexican peso now, but the same fundamentals speak against it in the long-term. The main one is: the Mexican economy is weak. Therefore, the question for the MXN is not where it reaches against the USD, but how long it manages to stand against it and where it drops to once it’s exhausted.
Resistance 18.8240
Support 18.5040
Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.
When I started trading stocks a few years ago, I often needed to pay more attention to my technical analysis skills and trust that the market would play fair according to my analysis. I have since discovered that the safer approach to trading stocks is to, more often than not, seek out investing opportunities - that is, catching stock commodities with a potential to rise.
The S&P 500 had a good week due to the impressive start of Q1 earnings and favorable inflation data. In March, the consumer price index rose 5%, lower than the previous month's 6%, and met economists' expectations.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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