Forex - Mexico Flows: Negative Tone Returns, Keeping MXN Above 19.10

 11:56 (GMT) 08 Nov

  [Forex Flows]

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Mexico Flows: Negative Tone Returns, Keeping MXN Above 19.10 (0101-PWYK-C01)

MXN is coming weaker from overnight trading, dropping 0.3% to trade at 19.1854. Risk aversion is back and DXY is recovering ground and the equity and commodity market are in negative territory. Weak trade data for China, showing negative growth in imports on top of concerns over the actual agreement between US and China over the rollover of tariffs is putting emerging currencies under pressure. The issue of USMCA approval in the US congress is not improving, as it is clouded by the re-emergency of the possibility of a shutdown of the US government and the impeachment process, Negative developments in this front, like a delay to 2020 could upset the currency, weakening towards 19.30/50.

Domestically, data is limited to nominal wages and private domestic consumption. The latter should confirm the slowdown in consumption while the former will underline one of the sources of core inflation resilience.

In the US, preliminary Nov Michigan CSI and Sep wholesale data is due on Friday. Moderate non-voters Bostic and Daly are scheduled.

Concerns on domestic policies remain strong but backdrop is improving and favors MXN to keep gains below 19.25, although the odds of breaking above the level are growing.

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