• US Dollar up against most emerging market currencies, including MXN. 
• Mexican central bank warns about state oil company Pemex in meeting minutes. 

The USD/MXN changed its course during the American session. It was headed for a test of the weekly low but bounced to the upside reaching levels on top of the key short-term resistance at 19.30. It peaked at 19.32, the highest level since last Friday and pulled back.

As of writing trades at 19.27, about to post the second daily gain in-a-row as it continues to bounce after finding support yesterday at the 20-day moving average. Still, the bullish momentum is likely to remain limited while unable to consolidate on top of 19.30.  

The move higher took place amid a stronger US dollar across the board, particularly against emerging and commodity currencies, boosted by some negative risk sentiment. Also, the Mexican peso lost some strength after the release of the minutes from the latest meeting of the Bank of Mexico. 

Banxico Minutes 

According to the majority of members of the board the situation around Pemex, state-owned oil company, could affect the macro outlook. “Most members considered that the current environment continues facing medium- and long term risks that might affect the country’s macroeconomic conditions. Among such risks, the majority of the members mentioned: Pemex’s financial fragility and outlook, and, in particular, an additional downgrade to its credit rating as it could have an impact on the federal government’s financial cost and, in general, on the country’s conditions for accessing external financing”. 

Growth risks are tilted to the downside while the balance of risk regarding inflation to the upside, noted board members. Most members pointed out that the central bank should maintain a prudent approach and signal clearly its commitment with its price stability mandate.