Best-Performing Currency Sinks as Mexico’s Obrador Advances

04/19/2018 Bloomberg

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Mexico’s peso, the best-performing currency this year, sank on Thursday after leftist candidate Andres Manuel Lopez Obrador gained ground in a poll and as volatility markets indicate a deeper rout closer to the elections.

The peso fell as much as 2.1 percent on Thursday after a Consulta Mitofsky survey showed Obrador’s leading with 32 percent. Investors are expecting a further dip closer to the July 1 presidential election, even though Obrador has taken some steps this year to reassure investors, such as supporting Nafta, TPP and fiscal discipline.

The peso’s six-month implied volatility surged on January 2 above 16% from around 14% in late December. An almost identical situation occurred on April 2, when three-month implied volatility surged from about 12% to above 15%.

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Dollar Slips Against Mexican, Canadian Currencies

04/16/2018 The Wall Street Journal

120px-20_Dollars_art3The Canadian dollar and Mexican peso rose against the dollar Monday, reflecting fresh optimism on trade negotiations with the U.S.

The dollar was recently down 0.1% against the Mexican peso to 18.03, its lowest level since late September. The U.S. currency was down 0.2% against the Canadian dollar to C$1.2577, hovering near a two-month low.

Some investors have become more optimistic that negotiators are closer to reaching a deal to revise the North American Free Trade Agreement, or Nafta, after reports that the Trump administration is hammering out a compromise on auto-industry rules.

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UPDATE 1-Mexico central bank holds key rate steady as inflation cools

04/12/2018 Reuters

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MEXICO CITY, April 12 (Reuters) – Mexico’s central bank held its benchmark interest rate steady on Thursday, as expected, citing cooling inflation and fewer risks to consumer prices, and signaled its current stance was in line with efforts to bring inflation back to its target.

The Banco de Mexico’s governing board unanimously voted to keep the key rate steady at 7.50 percent, as forecast by 18 of 21 analysts polled by Reuters last week.

In a statement, the bank said that its current monetary policy position was in line with the anchoring of inflation expectations and bringing prices back to its 3 percent target.

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Analysts expect Mexico central bank to hold rates with inflation easing

04/09/2018 Reuters

MEXICO CITY (Reuters) – Mexican inflation cooled more than expected in March to the lowest level in over a year, official data showed on Monday, leading analysts to predict the central bank will not change rates at this week’s monetary policy meeting.

The pace of consumer price gains in the 12 months through March MXCPIA=ECI slowed to 5.04 percent, the national statistics agency said. That was below analyst expectations in a Reuters poll for 5.12 percent, and down from a 5.34 percent rate in February.

It was the lowest rate since February 2017, when annual inflation reached 4.86 percent. The central bank targets inflation of 3 percent, with a 1 percentage point tolerance.

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Trade worries likely to end Mexico peso’s recent upswing: Reuters poll

04/06/2018 Reuters

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BRASILIA (Reuters) – Recent strength in the Mexican peso is unlikely to hold in coming months as U.S. President Donald Trump doubles down on his protectionist stance, the latest Reuters survey of currency market strategists showed.

The latest results, taken April 3-5, suggest a change in attitudes among economists and strategists, who last month mostly shrugged off the prospect of a global trade war.

Now, they seem increasingly fearful that Mexico could be caught in the crossfire between the United States and China.

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Trump’s China Trade Focus Brings Mexico Stock Investors Respite

04/04/2018 Bloomberg

Pesos by Flickr user Aleiex
Photo by Flickr user Aleiex

Investors in Mexico’s beaten-down equity market got some more relief Wednesday as escalating trade tension between the world’s two largest economies took the spotlight off of U.S. President Donald Trump’s protectionist stance toward his country’s southern neighbor.

Mexican stocks jumped 1.7 percent, bucking losses in other global equity markets sparked by fear that tensions could escalate between the U.S. and China. The benchmark IPC Index has gained 3.6 percent in the past two days, the biggest gain since January 2017.

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Mexico inflation slowing, expectations anchored: central bank chief

04/04/2018 Reuters

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MEXICO CITY (Reuters) – Mexican Central Bank Governor Alejandro Diaz de Leon said on Wednesday that a downward trend in inflation has become apparent but that the bank is still ready to act if necessary.

Diaz de Leon, addressing a meeting of senators, said that inflation expectations have remained well-anchored but added that the bank would act in an “opportune and firm” manner to ensure expectations would remain stable.

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