USD/MXN steady between 20.00 and 20.50 ahead of Banxico

The Mexican Peso is unchanged against the US dollar on Wednesdays after rising sharply yesterday. Tomorrow the Bank of Mexico will announce its decision on monetary policy. 

Banxico to act

US election results triggered a sharp decline of the Peso that reached all-time lows versus the Greenback. The devaluation boosted expectations of a rate hike from the Mexican central bank. Market consensus points to a 50 bp hike but the risks are tilted toward a more aggressive increase in interest rates. 

USD/MXN bottomed today at 20.15, the lowest in six days and then bounced to the upside. It found resistance below 20.50 and during the last hours it has been steady, hovering around 20.30, the same level it closed yesterday. 

The dominant trend continues to point to the upside and in the very short-term the pair is making a bearish correction after a rally of more than 10%. 

“Volatility is likely to remain elevated, while further weakness appears likely as uncertainty over what a Trump presidency really entails will continue well into next year,” said analysts from Brown Brothers Harriman.