USD/MXN back under 23.00 as Mexican peso extends recovery

• The Mexican peso rose for the second day in a row versus the US dollar.
• Correction in USD/MXN finds support at the 22.75 area, more losses seen below.

The USD/MXN dropped on Wednesday amid a decline of the US dollar across the board and on the back of risk appetite. The Mexican peso lagged behind Latin American currencies.

During the Asian session, the pair peaked at 23.10 before turning to the downside. It bottomed at 22.68 after the beginning of the American session when the Dow Jones peaked. It then corrected higher and stabilized around 22.80. It remained steady after the release of the FOMC minutes, holding onto daily losses.

HIS Markit Manufacturing: Mexico is not the US

While data from the US came in above expectations with the ISM Manufacturing even rising above 50, in Mexico the HIS Markit Manufacturing came in at 38.6 in June, slightly above the 38.3 during May. The report mentioned that “operating conditions continue to deteriorate as demand tumbles further.”

"Going forward, demand will be the key driver in any recovery on the new orders index in the coming months. Only when demand begins to rebound will the Mexican manufacturing sector see a sustained rise in output”, commented Eliot Kerr, economist at ISH Markit.

Technical levels