The Mexican peso gained on speculations that the Federal Reserve will stimulate the US economy as measure to support the faltering recovery and on rumors that European central bank will coordinate their efforts to bolster the European economy.
With the recent wave of negative macroeconomic data from the United States, the third round of quantitative easing is a definite possibility. Aryam Vazquez, an economist at Wells Fargo & Co., voiced his opinion regarding the influence of US fundamentals on riskier assets with higher yield:
Itâs a given that every time we get weak data here in the US, QE3 talk begins to increase. These robust liquidity prospects certainly aid emerging-market assets such as the Mexican peso.
There are rumors that central banks in Europe or even from other parts of the world will coordinate their efforts to boost liquidity in financial markets. There is not much information about that plan, if it indeed exists, but investors are happy to swallow any piece of good news after the constant stream of negativity.
USD/MXN traded at 13.8880 as of 1:50 GMT today after it fell from 14.0260 to 13.8700 yesterday. EUR/MXN declined from 17.5620 to 17.5428 on today’s trading session.
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