The Canadian dollar and Mexican peso have benefitted from the better than expected US ISM and the risk-on environment. The strong gains in the Canadian dollar come even though as we noted yesterday, a BOC rate hike at the Sept 8th meeting, which previously was fully discounted, seems less likely given the string of disappointing Canadian data, doubts over the US recovery and the pullback in commodity prices.
The Mexican peso, which posted among its lowest closes for the year yesterday also rallied strongly today. The more than 1% gain comes despite some comments from a Moody's analyst warning that Mexico's security issues and the vulnerability of its oil revenue ($50 a barrel cited) may jeopardize its rating.
Initial support for the dollar comes in near CAD1.0440, which corresponds to a retracement objective and 20-day moving average. Initial support for the greenback against the peso comes in in the MXN12.97-MXN13.0 band.
Although Mexican and Canadian equities have outperformed the US this year, today it is the US that outperforms. On the other hand, US and Canadian bonds are selling off hard (10-year yields up 10-13 bp), Mexico's global bond (dollar denominated) is up a single basis point.
Canada and Mexico Benefit from Stronger ISM
![Canada and Mexico Benefit from Stronger ISM]()
Reviewed by Marc Chandler
on
September 01, 2010
Rating:
