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Weight drops due to new alternative to Covid-19

Weight drops due to new alternative to Covid-19

The Mexican peso was falling amid a shift in global markets as investors scrambled to search for safe assets amid fears that a new type of coronavirus would further affect global growth and inflation.

The Mexican currency fell 1.3%, in line with the negative performance of the South African rand and the Russian ruble, as investors rushed to look for safe-haven assets such as the Swiss franc and Japanese yen.

Yesterday’s weaker-than-expected activity data linked to President Andres Manuel Lopez Obrado’s appointment of Victoria Rodriguez to head Bancaxico reinforced operators’ view that the central bank could lean toward a more dovish approach, which could weigh on the currency.

The peso fell as much as 2.5 percent earlier in the session, indicating its fragility.

The Mexican peso is the second worst performing currency in emerging markets this week after the Turkish lira, down 3.4 percent.

Today we release the Mexican Trade Balance for October, but the data will likely be ignored given the intensity of global risk-reducing sentiment, which is expected to be the dominant catalyst for the day.

Stocks in Europe are falling, with some indexes dropping as much as 4 per cent, while the World Health Organization (WHO) and South African scientists are said to be working “lightning fast” to determine how quickly the B.1.1.529 variant is spreading and if it is resistant to vaccines.

What is known so far is that the variant has many more mutations than delta, raising the odds that it is more transmissible and better able to evade previous immunity.

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Commodity markets are also being hit hard. Copper fell 3.3 percent, while oil lost 6.3 percent in the United States on concerns that more landfills will need to be implemented to combat Covid-19.

Low liquidity in the week of Thanksgiving in the US may also help exacerbate the movements.

(with information from Bloomberg)