Forex Market: USD/MXN daily trading forecast

Yesterday’s trade saw USD/MXN within the range of 15.2860-15.4862. The pair closed at 15.3540, losing 0.57% on a daily basis.

At 6:18 GMT today USD/MXN was down 0.02% for the day to trade at 15.3524. The pair held in a daily range of 15.3308 – 15.3628.

Fundamentals

United States

Durable goods orders in the United States probably increased 0.6% in March compared to a month ago, according to the median forecast by experts. In February new orders for manufactured durable goods plunged by 1.4%, defying projections for a 0.4% increase following Januarys 2.0% jump.

Durable goods orders, as an indicator, gauge the strength of the US manufacturing sector and represent a major portion of the nations factory orders. This is a closely watched report on manufacturing activity, because durable goods are the first type of goods to be affected by an economic downturn or upturn.

Durable goods are designed to last three or more years and encompass aircraft, automobiles and buses, cranes, machine parts, appliances etc. More than 85 industries are represented in the sample, which covers the entire United States. The logic behind this indicator is that consumers need to be very optimistic in order to buy an automobile in comparison with, for example, first necessities such as food or clothing. Therefore, durable goods are among the first products a consumer may abstain from purchasing, in case overall economic activity begins to contract. The same is valid for company purchases. During a recession, an airliner is less likely to purchase new planes, and as factory output contracts, it is less likely to purchase new machines.

Durable goods orders, which exclude transportation, probably rose 0.3% in March, following a 0.6% contraction in February, which was the fifth in a row. Large ticket orders, such as automobiles for civil use or aircraft, are not present in the calculation, as their value may be in a wide range. This way the index provides a more reliable information in regard to orders for durable goods.

In case orders increased at a faster-than-projected pace, this would certainly have a bullish effect on the greenback. The US Census Bureau is scheduled to release the official data at 12:30 GMT.

Mexico

Mexican index of retail sales probably rose at an annualized rate of 4.2% in February, according to the median forecast by analysts, adding to the previous months 4.7% jump. If confirmed, this would be the 10th straight month of gains. Monthly retail sales probably rose 0.2%, following a 2.1% increase in January.

Retail sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the primary indicator for consumer spending, which itself accounts for a greater part of nations economic activity. Therefore, higher retail sales suggest accelerating economic activity, which is generally seen as having a bullish effect on the local currency. Lower retail sales, on the other hand, suggest that the economy is cooling, which in general is bearish for the peso. Mexicos National Institute of Statistics, Geography and Informatics (Instituto Nacional de Estadística y Geografía) will release its report on retail sales at 13:00 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 15.3754. In case it penetrates the first resistance level at 15.4648, it will encounter next resistance at 15.5756. If breached, upside movement may attempt to advance to 15.6650.

If the cross drops below its S1 level at 15.2646, it will next see support at 15.1752. If the second key support zone is breached, downward movement may extend to 15.0644.

In weekly terms, the central pivot point is at 15.2869. The three key resistance levels are as follows: R1 – 15.4640, R2 – 15.5996, R3 – 15.7767. The three key support levels are: S1 – 15.1513, S2 – 14.9742, S3 – 14.8386.