Forex Market: USD/MXN daily trading outlook

Tuesday’s trade saw USD/MXN within the range of 13.1664 – 13.0906. The pair closed at 13.0929, losing 0.55% on a daily basis, having gained 0.52% last week.

At 8:23 GMT today USD/MXN was down 0.10% for the day to trade at 13.0811. The pair held in a daily range between 13.0797 and 13.0993.

Fundamental view

United States

The US dollar continued to draw support following Tuesdays overall upbeat data and Feds hawkish tone.

Durable goods orders in the United States rose by a record 22.6% in July amid surging bookings for commercial aircraft after an air show in the U.K. in the same month. June’s reading received an upward revision to show a 2.7% growth. The all-time record surge was due to a 318% jump in airplanes orders. Automobile orders also added to the upbeat reading, as demand for autos rose by the most since August 2009.

However, durable goods orders, which exclude transportation items, fell by 0.8% in July, following the previous month’s upward-revised 3.0% jump. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation due to their volatility. This way the index provides a more reliable information in regard to orders of durable goods.

Non-military durable goods orders excluding aircraft, considered as a proxy for future business investment, slid by 0.5%, compared to the previous month’s upward revised 5.4% gain.

Meanwhile, the S&P/Case-Shiller House Price Index rose by an annualized 8.1% in June, compared to projections for a slowdown to 8.4% from the preceding months 9.3% gain. Month-on-month, single-family homes prices in the observed 20 metropolitan areas rose by 1.0%, matching projections, compared to the previous periods upward-revised 1.2%.

The dollar received a strong boost after the Conference Board reported that consumer confidence in the US surged in August to the highest in almost seven years. The respective index touched 92.4, defying analysts expectations for a drop to 89.0 from Julys downward-revised 90.3. Earlier in the month, data showed that the US economy created more than 200 000 jobs in July for the sixth consecutive month, further supporting Feds switch to a hawkish stance.

US data tomorrow is projected to show that the worlds biggest economy expanded by 3.9% in the second quarter, while pending home sales rose in July by 0.6% following Junes 1.1% contraction. Initial jobless claims during the week ended August 23rd probably rose by 2 000 to 300 000.

Mexico

At 13:00 GMT Insituto Nacional de Estadistica Y Geografia is expected to report on nation’s trade balance during July. A trade deficit of $722 million is projected to be reported, compared to Junes surplus of $424 million.

The trade balance reflects the difference in value between exported and imported goods during the respective period. A positive figure indicates that more goods and services have been exported than imported. Export demand has a direct link to demand for the national currency and also causes an impact on levels of production. An expanding surplus, or a narrowing deficit, are generally seen as bullish for the local currency, and vice versa.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 13.1166. In case USD/MXN manages to breach the first resistance level at 13.1427, it will probably continue up to test 13.1924. In case the second key resistance is broken, the pair will probably attempt to advance to 13.2185.

If USD/MXN manages to breach the first key support at 13.0669, it will probably continue to slide and test 13.0408. With this second key support broken, the movement to the downside will probably continue to 12.9911.

The mid-Pivot levels for today are as follows: M1 – 13.0160, M2 – 13.0539, M3 – 13.0918, M4 – 13.1297, M5 – 13.1676, M6 – 13.2055.

In weekly terms, the central pivot point is at 13.1079. The three key resistance levels are as follows: R1 – 13.1803, R2 – 13.2235, R3 – 13.2959. The three key support levels are: S1 – 13.0647, S2 – 12.9923, S3 – 12.9491.