News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.



Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events


Economic Calendar

Economic Calendar Events

Free Trading Guides
Please try again
Oil - US Crude
Wall Street
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in EUR/JPY are at opposite extremes with 67.24%. See the summary chart below and full details and charts on DailyFX:
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Silver: 0.15% Gold: 0.11% Oil - US Crude: -0.23% View the performance of all markets via
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: US 500: 0.21% Wall Street: -0.35% FTSE 100: -0.94% France 40: -1.21% Germany 30: -1.23% View the performance of all markets via
  • Markets have digested the realization that the rollout of the vaccine campaign does mean an immediate solution to the current economic and social problems. Get your market update from @HathornSabin here:
  • The $DXY continues to hold above the psychological level of 90 and is testing around 90.30 this morning. $USD
  • Germany 30 IG Client Sentiment: Our data shows traders are now net-long Germany 30 for the first time since Dec 11, 2020 when Germany 30 traded near 13,135.60. A contrarian view of crowd sentiment points to Germany 30 weakness.
  • ECB's Lane: - If favorable financing conditions can be maintained, maximum amount of asset purchases may not be necessary - Recent intensification of pandemic represents a significant downside risk, requires continuation of various fiscal support measures #ECB $EUR
  • ECB's Elderson: - Impact of the crisis on the European banking sector has yet to be fully revealed - Consequences of Brexit still need to be dealt with - It is "high time" to complete the EU banking union through institutional/regulatory architecture, deposit insurance #ECB $EUR
  • Italy's coalition Democratic Party (PD) wants Conte to resign and guarantees support for him as head of new government - PD Lawmakers $EUR
  • $NZDUSD is back above 0.7200 this morning, trading near one of January's key levels for the pair. $NZD $USD
USD/MXN Outlook: Debt Rating Downgrade May Bring Further Weakness for the Peso

USD/MXN Outlook: Debt Rating Downgrade May Bring Further Weakness for the Peso

Daniela Sabin Hathorn, Analyst
Mexican Peso Chart

Source: IG

Main USD/MXN Talking Points:

  • The US Dollar retreats after continued Central Bank and government stimulus reignites risk-appetite
  • USD/MXN dips below 23 but regains upward momentum as Mexico receives a credit downgrade

Another week of heightened volatility comes to an end and the USD/MXN regains a slight uptrend after a step-back during the week. The US Dollar has been steadily losing ground against G10 currencies as governments and Central Banks pledge unprecedented levels of fiscal and monetary stimulus to combat the impact of COVID-19 on the world economy. This has caused weakness in the dollar as investors recover an appetite for risk and undo some of the flight to safety trades we have seen in the last few weeks.

The continued support from the Federal Reserve has also caused the dollar to retreat against emerging market currencies, usually considered to be highly risky and strongly correlated to growth. After a period of relative stability had seen EMFX push higher before the COVID-19 outbreak took place, USD/MXN reached an all-time high last week when the exchange rate surpassed the 25 pesos per dollar mark. This week’s price action has seen the pair dip below the 23.00 handle, but Friday’s trading session has seen a small rebound back towards 23.50.

But more bad news lies ahead for the Mexican Peso, as S&P Global has downgraded Mexico’s long-term debt rating from BBB+ to BBB given the significant impact that COVID-19 is expected to have on its economy. Not only has the credit rating agency downgraded its rating it has also set the rating outlook to negative, which points to another possible downgrade in the next 12 to 24 months.

This has placed Mexico’s rating to just two categories above what is considered to be a speculative investment, causing concern amongst investors. Up until recently, the Mexican Peso has been benefiting from a high inflation-adjusted carry trade, even after a series of continuous rate cuts by Banxico, which has left the current rate at 6.5%, the Mexican Peso is still able to offer much better returns than most other currencies. But this rating downgrade could reduce the investment flow towards the Mexican Peso, which would in turn appreciate the USD/MXN exchange rate.

In their statement, S&P Global pointed out that potential increases in the energy sector's contingent liabilities could worsen the sovereign's debt levels and lead to subsequent downgrades. The financial profile of Pemex, a government-owned oil company, has weakened significantly over the past five years and has become more vulnerable in the midst of declining oil prices, which could have a large impact on the country’s rating.


The push above 22.05 saw USD/MXN create an all-time high which did not stop until just below 25.50. Looking at the daily chart we can see how Thursday’s price action stopped just above the Fibonacci retracement of 38.2% from the multiyear highs, bouncing back around the 22.85 level before continuing higher and regaining the 23.00 handle. If bears manage to regain the upper hand, we could see some resistance around this 38.2% retracement level at 22.74, on its way to the next Fibonacci level at 21.94.

On the upside, the overnight session has seen some resistance at 24.05 which could be re-tested if the 23.6% Fibonacci level at 23.84 is cleared.


USDMXN Daily Price Chart

--- Written by Daniela Sabin Hathorn, Junior Analyst

Follow Daniela on Twitter @HathornSabin

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.