USD/MXN drops toward 20.00 as Mexican peso rallies

The Mexican peso is today among the top performers in the currency market on Tuesdays and against the US dollar is gaining more than 2%. The softer tone of the president-elect Donald Trump, favored the correction in the Peso. 

USD/MXN reached last week an all-time high at 21.38, before pulling back. Yesterday it traded above 21.00 and today is moving toward 20.00. The pair is trading at daily lows around 20.27; it started the day at 20.70. 

Banxico, US data, crude and Fed

The rally in crude oil prices is also helping the Mexican peso today. The WTI barrel is up almost 5%. In the US, retail sales data increased speculations about a rate hike from the Federal Reserve in December, that now is almost fully priced in. 

In Mexico, the central bank meets on Thursday and a rate hike is expected after the sharp devaluation of the local currency following the US elections. Analysts expect a raise in the key interest rate of 50 bp but risks are tilted toward a bigger hike.