Mexican Peso Rallies on Immigration Deal News

Asian indices started the week higher as investors are digesting the news that President Donald Trump suspended plans to impose tariffs on Mexico. The Nikkei225 finished 1.20 percent higher to 21,134 the Hang Seng benchmark in Hong Kong, finished 2.31 percent higher at 27,584. The Shanghai Composite finished 0.86 percent higher to 2,852, while in Singapore the FTSE Straits Times index finished 0.69 percent higher to 3,188. Australian equities are closed today.

European session started on positive foot today for the fourth trading day in a row as traders cheer the U.S. – Mexico deal, DAX30 is adding 0.77 percent to 12,045, CAC40 is 0.24 percent higher at 5,377 while the FTSE MIB in Milan is trading 0.04 percent higher at 20,369. The London Stock Exchange is 0,39 percent higher to 7,360 as the Brexit uncertainty continues.

In commodities markets, crude oil continues the rebound from recent low and trades at 54.23. Oil is down almost 18% from the high in late April, wiping out about half of its rally earlier this year, due to increasing trade worries. Brent oil also trades higher to $63,50 per barrel as major oil producers have yet to agree on adjustments on output. Gold feels the pressure today giving up more than 10 dollars to 1,326, as news from the US-Mexico front calms investors who are dumping safe-haven assets. The precious metal broke below the 50 and 100 hour moving averages turning the short term technical picture to bearish. Gold will find support at 1300 round figure and then at 1295 the 100-day moving average while more bids will emerge at 50-day moving average at 1287 on the upside resistance stands at 1344 the high from the previous week.   

In cryptocurrencies market, bitcoin (BTCUSD) continues the consolidation between mid 7,000 and 8,000, the daily low for BTC was at 7,493 and the daily high at 7,744. Immediate support for BTC stands now at $7,411 the low from the previous week, on the upside strong resistance now stands at 8,000 round figure. Ethereum (ETHUSD) plunges to 236 giving up over 12 dollars, with capitalization now to 25 billion, on the upside the immediate resistance stands at 287 the recent high while the support stands at 200 round figure, Litecoin (LTCUSD) trades higher at 116. The crypto market cap holds above $173.0B.

On the Lookout: US said that they had reached a deal with the Mexican government to pinch off immigration levels at the US southern border.

IMF Chief Christine Lagarde warned that global growth is under threat from mounting trade tensions and climbing debt levels. Urges the US and China to remove tariffs affecting goods worth hundreds of billions of dollars to “give more certainty and confidence to their economies and to help, not hinder global growth”.

The markets are expecting the Fed to cut rates by 25 basis points in September this year, according to the Fed funds futures while some economists expect 2 more cuts until the end of the year.

In the America economic calendar, we await JOLTS Job Openings for the month of April will be the only release in the US docket.

Mexican Peso
USDMXN Daily Chart

Trading Perspective: In fx markets the Mexican peso trading more than 2percent higher at 19.1928 pesos per dollar following Friday’s US-Mexico migration agreement. US dollar trades higher on speculation over Fed rate cut after comments from the Federal Reserve on Monday, raised expectations the U.S. central bank is moving closer to a rate cut. As of writing Greenback is trading at 96.80, while the Aussie dollar trades lower to 0.6965 despite positive news from Chinese trade data. Kiwi also trades lower to 0.6613 level as New Zealand has cut its budget surplus forecast for 2019/20 to NZD1.3bn.

GBPUSD is indecisive for one more day trading above and below the 1.27 mark as the bearish momentum for Cable is still intact amid growing concerns over Brexit. The pair hit the daily low at 1.27 and the daily high at 1.2741. Major support now stands at 1.26 recent low. On the upside immediate resistance now stands at 1.2723 the high from yesterday. Pound shows persistent weakness amid UK political uncertainty and also on the back of global risk aversion, so any uptick can match excess offers.

In Pound futures markets the open interest increased by 3.3K contracts on Friday, reversing five consecutive daily drops, volume rose by nearly 21.5K contracts following three drops in a row.

EURUSD started the week lower breaking below the 1.13 mark amid broad US strength. The pair is trading at 1.1295 but the sellers look exhausted below the 1.13. On the upside, the immediate resistance stands at 1.13, while more offers will emerge at 1.1367 the 200-day moving average. Support stands at 1.1273 the 100-day moving average, while more bids will emerge at 1.12 round figure. We are following news from Italy as their budget deficit dispute with the European Commission continues, and the political turmoil in Austria and Greece.

In euro futures markets, the open interest increased for the third session in a row on Friday by around 6K contracts, volume, shrunk by around 24.7K contracts.

USDJPY trades higher adding 20 pips to 108,68, today the pair hit the low at 108.36 and the high at 108.71. The pair will find support at 107.84 recent low, on the upside immediate resistance for the pair now stands at 108.71 the high from the Asian session. The USD price dynamics will continue to drive the pair’s momentum as traders focus shifts to FED next move.

In Yen futures markets, open interest shrunk by more than 3K contracts on Friday, while volume rose by around 35.2K contracts.

USDCAD facing strong selling pressure and trading as of writing at 1.3266 close to daily low as the rebound in crude oil prices, Canada’s main export item, seems to have added further strength in the Canadian Dollar (CAD). The pair will find immediate support at the 200-day moving average around 1.3250 while extra support stands at 1.3200 round figure. On the upside, immediate resistance stands at the 1.33 zone before an attempt to 1.3348 where the 100-day moving average stands.

USDCAD Hourly (H1) Chart