Mexican Peso slides for two straight days against US Dollar on risk aversion

• Mexican Peso continues to slump as USD/MXN buyers target 18.40 with the US Dollar edging up.
• Mexico’s economic calendar to feature the Unemployment Rate on October 26.
• USD/MXN is underpinned by a risk-off mood and elevated US bond yields.

Mexican Peso (MXN) extends its losing streak against the US Dollar (USD), sliding more than 0.65%, as the USD/MXN has risen to a three-day high of 18.39 after bottoming at around 18.23 during Wednesday’s European session.

Market mood remains deteriorated as corporate earnings in the United States (US) keep Wall Street equities under pressure while the conflict in the Middle East, keeps traders wary. The latest data reported in the United States sent Treasury bond yields rising, with the US 10-year benchmark note rate rising to 4.919%, up nine basis points.

Consequently, the US Dollar Index (DXY), a gauge of the Greenback value against a basket of peers, advanced to a daily high of 106.52, underpinning the USD/MXN to higher levels, amid the lack of data in Mexico’s economic calendar.

On the data front, the US Census Bureau revealed that New Home Sales in the US rose by 12.3% MoM in September at the fastest pace since August 2022. Across the border, USD/MXN traders are eyeing the release of the Mexican Unemployment Rate on October 26.

Daily Digest Market Movers: Mexican Peso tumbles to a three-day low as USD/MXN reaches 18.39

• US New Home Sales for September came at 0.759M vs. August’s 0.676M.
• On Tuesday, Mexico's National Statistics Agency INEGI reported annual headline inflation hit 4.27%, down from 4.45% at the end of September, below forecasts of 4.38%.
• Mexico’s core inflation rate YoY was 5.54%, beneath forecasts of 5.6%.
• US S&P Global Manufacturing PMI for October jumped to 50, exceeding forecasts of 49.5, while the Services PMI exceeded the contractionary consensus of 49.9, reaching 50.9.
• US S&P Global Composite PMI was 51, above the prior 50.2.
• The Bank of Mexico (Banxico) held rates at 11.25% in September and revised its inflation projections from 3.50% to 3.87% for 2024, above the central bank’s 3.00% target (plus or minus 1%).
• On Thursday, focus will turn to Mexico's Jobless Rate and US Q3 preliminary GDP figures.

Technical Analysis: Mexican Peso remains weak as USD/MXN buyers reclaim 18.30

The USD/MXN upward bias remains intact, and after forming a ‘bullish harami’ candlestick chart pattern, the pair rallied toward 18.39 before retreating to current levels above the October 24 close of 18.25. A breach of Wednesday’s daily high could pave the way for testing last week’s high at 18.46 before challenging 18.48, October’s high. Once those levels are cleared, the 18.50 figure would be up for grabs. Conversely, the USD/MXN must drop below the 18.00 psychological figure for sellers to reclaim the 200-day Simple Moving Average (SMA) at 17.73.