USD/MXN consolidates weekly gains after Banxico

The Mexican peso remains steady after the decision of the Bank of Mexico to leave rates unchanged. USD/MXN continued to trade around 18.17, modestly lower for the day, after posting yesterday the highest close since early July. 

The pair peaked earlier today at 18.29, the highest in two months and then pulled back amid a bearish correction of the US dollar in the market. The decline found support at 18.15. 

USD/MXN is consolidating weekly gains. The pair strengthened after breaking above 18.00. The immediate resistance is the 18.30 area and then 18.45. On the flip side, support is seen at 18.15 and below at 18.00. A significant slide under 18.00 would remove the short-term upside bias. 

Banxico on hold, cautious tone

On a unanimous decision, the Bank of Mexico kept rates unchanged. Banxico said that it will be vigilant of the exchange market and also of the impact of the earthquake on prices. Regarding growth, the balance of risks has deteriorated according to the central bank amid NAFTA negotiations. They see inflation reaching the top in the coming months and warn that earthquakes could cause supply problems and push some prices higher. They expect the effect of quakes on the economy and inflation, to be temporal.