USD/MXN jumps to 20.40, up 5% in 3 days

• MXN assets remain under pressure amid investors concerns on AMLO’s policies. 
• US dollar accelerates and rises to 4-month highs in Mexico.
• MXN continue to underperform, worst EM currency in October. 

The Mexican peso continued to slide against the US dollar and hit the lowest since mid-June. The USD/MXN resumed the move to the upside after a modest pause yesterday and jumped to 20.46 before pulling back to the 20.30. 

The pair is about to post the highest daily close since June 20 and still hold a strong bullish tone, despite overbought readings in technical indicators. Since the beginning of the week is up by 5% and almost 9% for the month. 

The Mexican peso was the worst performer among the most traded currencies in the world during October. Most of the losses took place after the “citizen consultation” about the New International Airport of Mexico. President-elect Andres Manuel Lopez Obrador announced the cancellation of the new airport under construction and triggered concerns about his future policies. 

Mexican bond yields jumped with the 10-year hitting 9%, the highest level in almost 10 years. If the depreciation of the Mexican peso continues, the central bank could raise interest rates in order to keep inflation expectations anchored. 

USD/MXN Levels to watch 

A consolidation above 20.30 would keep the bullish tone intact. The next strong resistance area is seen at 20.50 followed by 20.65. On the flip side, now 20.05/10 is the immediate support and then 19.90 and 19.60/65. vvvvv