Forex Market: USD/MXN daily trading outlook

Yesterdays trade saw USD/MXN within the range of 15.5208 – 15.4460. The pair fell 0.1% to close at 15.4820.

At 07:00 GMT today USD/MXN was up 0.17% for the day to trade at 15.5069, holding in a daily range of 15.4801 – 15.5114. The pair is up 1% for the week so far, following two weekly declines.

Fundamental view

United States

A monthly survey by Thomson Reuters and the University of Michigan is expected to show today that consumer confidence in the United States probably improved in June. The final estimate of the corresponding index will probably confirm a preliminary reading of 94.6 released on June 12th, rebounding after a drop to 90.7 in May from 95.9 in April.

The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.

The sub-index of current economic conditions, which measures US consumers’ views of their personal finances, probably increased to a reading of 106.7 from 100.8 in May, while the sub-index of consumer expectations likely rose to 86.9 from a final value of 84.2 a month earlier.

In case the gauge of consumer sentiment showed a larger increase than anticipated, this would have a bullish effect on the US dollar. The final reading is due out at 14:00 GMT.

Mexico

In Mexico, Insituto Nacional de Estadistica Y Geografia (INEGI) is expected to report at 13:00 GMT that the nations trade deficit widened to $125 million in May after it swung to an $85 million deficit in April from a $480-million surplus in March.

Year-on-year, exports slid 3.3% to $32.95 billion due to a 50.5% contraction in oil sales and a 25.3% drop in mining exports, while non-oil shipments rose 2.7%. Imports fell 1.6% to $33.04 billion. Month-on-month, exports rose 1.4% and imports grew 3.3%.

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. A larger-than-expected trade deficit would have a certain bearish effect on the peso, and vice versa.

A separate report by the statistics agency is expected to show that Mexicos rate of unemployment probably inched down to 4.30% in May after jumping to 4.31% in April from a 3-month low of 3.86% in March. Seasonally adjusted, the unemployment rate is projected at 4.30% from 4.32% in April and 4.24% in March.

It represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. The rate of unemployment also reflects the countrys overall economic state, as there is a strong correlation between consumer spending levels and labor market conditions. Low rates of unemployment are accompanied by stronger spending, which causes a favorable effect on corporate profits and also leads to overall growth acceleration. Therefore, in case the rate of unemployment decreased more than expected, this would have a bullish effect on the local currency.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 15.4829. In case it penetrates the first resistance level at 15.5199, it will encounter next resistance at 15.5577. If breached, upside movement may attempt to advance to 15.5947.

If the cross drops below its S1 level at 15.4451, it will next see support at 15.4081. If the second key support zone is breached, downward movement may extend to 15.3703.

In weekly terms, the central pivot point is at 15.3252. The three key resistance levels are as follows: R1 – 15.4868, R2 – 15.6270, R3 – 15.7886. The three key support levels are: S1 – 15.1850, S2 – 15.0234, S3 – 14.8832.