The Mexican Peso (MXN) edges higher on Thursday following a reversal on Wednesday, in which it first fell to a one-month low against the US Dollar (USD) but then reversed – partly due to technical buying – and recovered by an average of about half a percent in its most heavily-traded pairs – the USD/MXN, EUR/MXN and GBP/MXN.
The Mexican Peso executes a technical bounce and rises despite negative fundamentals. The move could be technically inspired or as a result of a revival in carry flows due to the weakening Yen. USD/MXN pulls back after testing the 20.00 hurdle. The pair remains in a broader uptrend.
Data released this week painted a gloomy picture of the Mexican economy after both Economic Activity and Retail Sales fell sharply in August. This reinforces the negative economic outlook forecast by the IMF for Mexico in its recent reports for 2024 and 2025. Weak growth will likely weigh on the Mexican Peso and pressure Banxico to lower interest, which would reduce foreign capital inflows.
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