USD/MXN jumps to monthly high above 19.30 after Finance Minister's surprise resignation
- In a surprise decision, Mexican Finance Minister Urzua announced his resignation.
- President Obrador named Deputy Finance Minister Arturo Herrera as his replacement.
- USD/MXN spikes to its highest level since early June at 19.33
The Mexican peso came under heavy selling pressure in the early trading hours of the American session after Mexican Finance Minister Urzua announced his resignation citing deep differences over economic issues. With the initial market reaction, the USD/MXN pair jumped to its highest level in a month at 19.33 but retreated slightly in the last hour. As of writing, the pair was up 1.5% on a daily basis at 19.1935.
Commenting on this political development and the market's reaction to it, "The sudden resignation of Mexican Finance Minister Urzua has understandably been taken as very negative by the market, re-introducing fiscal regime uncertainty to Mexico," said TD Securities analysts.
"His replacement is experienced in both Mexican and global fiscal matters, though the market will need to see a strong signal of fiscal orthodoxy to regain stability."
On the other hand, the broad-based USD strength amid receding hopes of the Fed making a sharp dovish shift in its policy outlook intensified the pair's upsurge. Before the FOMC publishes the minutes of its June policy meeting tomorrow, the US Dollar Index remains on track to close the fifth straight day in the positive territory and was last up 0.14% on the day at 97.50.
Technical levels to watch for