USD/MXN climbs to a three-week high on US Dollar strength, uncertainty in Mexican rails – by christianborjon USDMXN Currencies EmergingMarkets Sentiment
rnment seizing Grupo Mexico’s rail line, increasing fears amongst investors in Mexico. Therefore, the USD/MXN opened the week at around 17.6960, but as of writing is trading at around the 17.85000area.on Friday showed “A section of track in the state of Veracruz was deemed “of public utility” and transferred to a government entity that’s building a line across the Isthmus of Tehuantepec, a relatively narrow strip of land that separates the Pacific Ocean and the Gulf of Mexico.
According to Bloomberg, “armed Navy personnel occupied company facilities on the Coatzacoalcos-Medias Aguas stretch of track beginning at 6 a.m. on Friday.” The takeover surprised the business community, contradicting campaign promises made by Mexican President Andres Manuel Lopez Obrador that his government wouldn’t seize private property.
Therefore, investors buying the Mexican Peso amidst its political stability and higher interest rates by the Bank of Mexico at 11.25% began to book profits and reposition themselves as the week started. Earlier in the Asian session, the USD/MXN commenced the week at 17.6960, but in one hour of trading, it jumped 1000 pips, toward 17.7957 on uncertainty about the outcome of the Mexican government’s actions.
Aside from this, US debt ceilings discussions would resume on Monday, as US President Joe Biden returned from the G7 reunion. On Friday, the Republicans stepped out from a reunion, halting the negotiations. The US Treasury Secretary Janet Yellen said that chances that the US can pay its bill by mid-June are trimming.
In the meantime, a light US economic agenda keep USD/MXN traders entertained on further Federal Reserve speakers. The Minnesota Fed President Neil Kashkari said, “I think right now it’s a close call, either way, versus raising another time in June or skipping. What’s important to me is not signaling that we’re done.” Of late, James Bullard, the President of the St. Louis Fed, commented he’s thinking of two more rate hikes this year.
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