Mexican Peso plunges as trade deficit widens and USD strengthens

The Mexican Peso depreciated sharply as the week began after data revealed Mexico’s Balance of Trade deficit widened — its worst reading since August 2020, according to data revealed by the Instituto Nacional de Estadistica, Geografia e Informatica (INEGI).

Mexican Peso falls to seven-week low as trade deficit hits worst level since August 2020.

data shows Mexican exports and imports plunged, with exports contracting 5.7% YoY. Upcoming US economic reports and FOMC decision expected to keep USD/MXN rally alive. The Mexican Peso depreciated sharply as the week began after data revealed Mexico’s Balance of Trade deficit widened — its worst reading since August 2020, according to data revealed by the Instituto Nacional de Estadistica, Geografia e Informatica . This, along with the strength of the US Dollar, keeps the USD/MXN trading at 18.

revealed that Mexico’s Exports and Imports plunged, though the former contracted -5.7% YoY, the steepest drop in 46 months. The data weighed on the Mexican Peso, which weakened to a seven-week low as the USD/MXN accelerates toward testing the year-to-date high of 18.99. The US economic docket will be busy.

Bank wrote in a note, “The unwind of high-yielding Latam FX carry trades over the past week has also been triggered by more risk-off trading conditions.” Wall Street confirmed this, with most US equity indices retreating from all-time highs, while safe-haven currencies like the Japanese Yen, the Swiss Franc and the Greenback advanced. Daily digest market movers: Mexican Peso undermined by wider deficit Mexico’s Balance of Trade in June was $-1.073 billion, missing the consensus of $1 billion.

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