USD/MXN continues to correct higher, despite crude oil and data
USD/MXN reached today the highest level in a week as it continues to bounce from the lowest level in almost a year, on the back of a stronger US dollar across the board. The greenback was among the best performers on Monday, as it recovers from the sharp decline of last month.
The pair today peaked at 18.24, the highest level since June 21 and is about to end the day hovering slightly above 18.20. Last week bottomed at 17.80, the lowest in a year. From last week lows, it has risen 2.25%.
Peso down despite data and crude oil rally
The Mexican peso dropped against the US dollar for the third day in a row. The decline is taking place despite the rally in crude oil price. The WTI is up more than 2% today and since Thursday gained 5.35%. Usually, the peso is positively correlated with crude oil prices, but that has not been the case lately.
Mexican data today showed an improvement but did not help the local currency. The Markit PMI rose in June to 52.3, up from 51.2 and above the 51.0 of market consensus. It is the best reading since May 2016. “The latest PMI survey provides a positive signal for near-term growth momentum across the Mexican manufacturing sector. Stronger rises in production and incoming new work underpinned the fastest improvement in business conditions since May 2016. The manufacturing rebound follows a period of subdued growth, with the headline PMI close to its lowest for three years in early-2017”, said Tim Moore, senior economist at IHS Markit and author of the report.
In the US, the ISM Manufacturing Index also rose above expectation, to the highest since August 2014 and offered support to the correction of the US dollar in the market.
US ISM: A strong month in June, positive signals for the future - Wells Fargo
Data ahead
Tomorrow Wall Street will not open (Independence Day) while on Wednesday, FOMC minutes will be released. In Mexico, the minutes of the latest Banxico meeting will be published on Thursday and on Friday CPI data. The key economic number in the US will be Friday’s NFP.