USD/MXN touched fresh weekly lows, despite a deficit in Mexican Trade Balance

Wall Street is opening the week with gains. A light economic docket in the United States (US) keeps traders focused on the developments around global banks. News emerged that First Citizens BancShares, Inc. agreeing to buy SVB Financial Group spurred an uptick in sentiment, which sent the USD/MXN sliding to its new weekly lows. Nevertheless, US Treasury bond yields are recovering, capping the USD/MXN drop.

US Treasury bond yields are rising, with the 10-year benchmark note rate at 3.473%, gaining almost ten basis points. However, the greenback has failed to follow suit with UST bond yields, with the US Dollar Index registering losses of 0.14%, at 102.973.

Meanwhile, money market futures expect the US Federal Reserve (Fed) to hold rates unchanged at the May meeting, as shown by the CME FedWatch Tool. Odds are at 63.8%, vs. 38.2% chances of a 25 bps rate hike.

During the weekend, Minnesota’s Fed President Neil Kashkari said that the risks for a recession have improved after the banking system crisis.

On the Mexican front, the Balance of Trade for February missed estimates of a $0.9B surplus and printed a deficit of $1.84B. However, the figures showed some improvement after January’s $4.125B deficit. Exports were reduced by 2.80% YoY in February, blamed on crude oil exports dropping 19.2%, while Imports grew at a 4.1% YoY pace.