The Mexican Central Bank (Banxico) voted to raise the target for the overnight interbank interest by 25 basis points to 8.00%, its first move since June. One member voted to a 50 basis point increase. The peso which is 0.6% stronger against the dollar, had a limited reaction to the monetary policy decision. The rate hike was widely expected as Mexican inflation declined modestly in October to 4.9%, but still well above the 3% target. The central bank also highlighted that since the last monetary policy decision, the Mexican peso depreciated significantly, down roughly 6% from the October 4th meeting .
Overall emerging market currencies are rebounding against the US dollar on renewed optimism on Sino-US trade talks. US Trade Representative Robert Lighthizer told some industry executives that the next round of tariffs on Chinese imports has been put on hold.
The USD/MXN daily chart is displaying a triangle pattern that is highlighting key resistance just above the 20.500 region. If the peso continues to rally, we could see key support from the 19.6000 level, followed by the 19.3200 region.
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