Mexican Peso bottoms out after heavy selling

The Mexican Peso oscillates within tight margins on Tuesday as the bearish squeeze that saw the currency sell off dramatically following the June 2 elections, loses momentum. 

Despite lingering concerns about a raft of constitutional reforms the new left-leaning coalition government wishes to make, which range from increasing the minimum wage to judicial reform, speculators appear to have eased off pushing the Peso lower. 

Analysts at Capital Economics see USD/MXN as fair priced at 19.00, the June 12 high. The overweight long position that had built up in the Peso when it climbed to the 16.20s in May, has likely now been fully cremated. 

Incoming President Claudia Sheinbaum sought to calm investors on Monday, saying “Mexico’s economy is healthy and strong, and [there is] nothing to worry about.”

She further cited independent polls commissioned over the weekend that indicated the controversial judicial reforms proposed by her party – which market commentators have held responsible for the Peso’s sell-off – are backed by the population at large. 

On the data front, the USD/MXN pair could face volatility after the release of US Retail Sales data for May. In Mexico, meanwhile, the statistics office INEGI will release GDP Aggregate Demand for Q1.