Speaks about growth and inflation
Mexico Central Bank's Carsten has been on the newswires this morning. He says:
- Current relative price shocks could have an impact on inflation expectations in the long term
- No conflict between aiming for inflation target and economic growth
- Monetary policy does not have an immediate impact on prices
- Inflation is not unanchored, nor is it out of control.
- Expectations for 2018 is that inflation will converge toward its target level
- At start of 2018, inflation will decelerate strongly and will slowly converge toward 3% target by the end of 2018.
Taking a look at the USDMXN, the price has moved above some technical levels on the hourly chart today.
- The 100 hour MA was rebroken and retested in trading before moving higher today
- The 18.5530 level was broken. This was a swing low on May 22 and was near highs from last Thursday and yesterday.
- The price moved above the 200 hour MA (green line) at 18.6006 . That is close risk now for the longs.
Drilling to the weekly chart, the pair last week stalled right at the 100 week MA level (blue line in the chart below) at 18.3642. The 38.2% of the move up from the April 2014 low is at 18.5103. With the price above each now (after moving below the 38.2% and testing the 100 week MA), if the market gets the idea that the corrective move down from that perspective is over technically, there is room to roam to the upside. We will see that idea manifest in charts like the hourly chart.
Is it time to buy USDMXN? The technicals from the weekly, and the price action on hourly (moving above the 100 and 200 hour MA) are showing that buyers are trying to push the bullish envelope. Stay above the 200 hour MA is the close support now....(risk for longs)
