USD/MXN drops below 21.00 as US dollar tumbles
- Mexican peso recovers on risk appetite, DXY extends losses.
- European markets end with strong gains, Dow Jones up by 2%.
- Crude oil falls almost 5%, metals under pressure.
The USD/MXN is giving up recent gains amid an improvement in market sentiment. The pair dropped back under 21.00, moving away from the three-month high it hit on Tuesday near 21.50.
Emerging market currencies rally on renewed risk appetite
As stock rally on Wednesday, emerging market currencies benefit. The Mexican peso is having the best day in months versus the US dollar. The USD/MXN dropped from 21.40 to as low as 20.91, a two-day low. The dollar is still up for the week, but off highs.
The best performer is the Polish zloty, with a decline in USD/PLN of 3.65% ahead of a meeting between Russia/Ukraine foreign ministers. Despite the overall recovery, the Russian ruble is still sharply lower. The USD/RUB trades at 135.20, up 6% for the day.
Mexico: inflation rises more than expected
The Consumer Price Index rose 0.83% in February, above the 0.80% expected. The annual rate increased from 7.07% to 7.28%. Inflation remains well above Banxico’s target, keeping further rate hikes on the table.
On Thursday, US inflation data is due. The next FOMC meeting is next week and a rate hike is already priced in. The signs about the future path of the Fed’s monetary policy will be relevant for financial markets and also for the upcoming March 24 Bank of Mexico meeting.
Technical levels