USD/MXN: drops for the second day in a row despite crude oil slide

The Mexican peso is up against the US dollar for the second day in a row and continues to recover after hitting yesterday the lowest in 10 days. USD/MXN dropped from 18.65 to 18.56 despite the retreat in crude oil. The WTI barrel erased gains during he last hours and dropped from above $49.00 toward $48.00. 

Earlier during the week, the Mexican peso came under pressure ahead of Sunday’s election in the State of Mexico. USD/MXN move toward a relevant key short-term resistance located at 18.75 but it remains below and now appears to be headed to 18.55, the immediate support. 

Mexico: PMI improves in May 

The IHS Markit Manufacturing PMI rose to 51.2 in May, from 50.7. According to Markit, the latest reading was also slightly above the average seen in the first quarter of 2017. “May’s survey data suggest a positive month overall for the Mexican manufacturing sector, with production levels returning to growth and export sales rising at the fastest pace since February”, said Tim Moore, senior economist at IHS Markit and author of the report. 

Banxico minutes

The Bank of Mexico released the minutes from its latest meeting when it rose the key interest rate by 25 basis points to 6.75%. The decision was unanimous. The document showed that three members thought that the balance in inflation risks has deteriorated from the previous meeting. Most of the members of the board expected inflation to start falling later during the current year, reaching the 3% target in 2018. Regarding growth, most members saw risks tilted to the downside. 

The next meeting of the Mexican central bank will be on June 22, one week after the FOMC meeting.