The US added more Chinese firms to its blacklist which has dampened hopes for an end to the trade war with China. High level talks will be held in Washington this week, but following the US moves the mood has soured. Forex traders will also wait for the release of minutes from the last Fed meeting where the central bank cut interest rates by 25 basis points. Are more interest rates cuts in the pipeline and how will this impact the USDMXN? Today’s fundamental analysis will explore price action in both directions.
The Mexican economy is heavily dependent on trade, especially to its Northern neighbour. Anti-China sentiment is on the rise in the US Congress after the NBA’s Houston Rockets GM tweeted a supporting message to Hong Kong which he later deleted amid pressure from China. Can Mexico benefit from the US-China trade war? Mexican inflation data will be released later today, how will price action in the USDMXN react? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Here are the key factors to keep in mind today for US Dollar trades:
- US JOLTS Job Openings: US JOLTS Job Openings for August a predicted at 7.191M. Forex traders can compare this to US JOLTS Job Openings for September which were reported at 7.217M.
- US Wholesale Inventories and Trade Sales: US Final Wholesale Inventories for August are predicted to increase by 0.4% monthly. Forex traders can compare this to previous US Wholesale Inventories for August which increased by 0.4% monthly. US Wholesale Trade Sales for August are predicted to increase by 0.2% monthly. Forex traders can compare this to US Wholesale Trade Sales for July which increased by 0.3% monthly.
- FOMC Minutes: The US Federal Reserve will release minutes from its last meeting today and forex traders will look for any potential change in the wording used which could give insight to future monetary policy adjustments.
Here is the key factor to keep in mind today for Mexican Peso trades:
- Mexican CPI: The Mexican CPI for September is predicted to increase by 0.25% monthly and by 2.99% annualized. Forex traders can compare this to the Mexican CPI for August which was reported flat at 0.00% monthly and which increased by 3.16% annualized. The Mexican Core CPI for September is predicted to increase by 0.29% monthly. Forex traders can compare this to the Mexican Core CPI for August which increased by 0.20% monthly. The Mexican Bi-Weekly CPI for the week ending September 30th is predicted to increase by 0.10% monthly and by 2.98% annualized. Forex traders can compare this to the Mexican Bi-Weekly CPI for the week ending September 16th which increased by 0.17% monthly and by 2.99% annualized. The Mexican Bi-Weekly Core CPI for the week ending September 30th is predicted to increase by 0.09% monthly. Forex traders can compare this to the Mexican Bi-Weekly Core CPI for the week ending September 16th which increased by 0.19% monthly.
Should price action for the USDMXN remain inside the or breakdown below the 19.5050 to 19.6530 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 19.6050
- Take Profit Zone: 19.1900 – 19.3185
- Stop Loss Level: 19.7425
Should price action for the USDMXN breakout above 19.6530 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 19.7425
- Take Profit Zone: 19.9890 – 20.2545
- Stop Loss Level: 19.6530
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