Mon, May 12 2014, 14:44

FXStreet (Łódź) – Mexico’s March Industrial Production data, released on Monday, surprised to the downside, suggesting that the pace of economic recovery in the country remains sluggish.

Mexico’s month-on-month Industrial Production dropped 0.1% in March, compared with the 0.3% rise in February and against forecasts of a 0.3% increase. On an annual basis the indicator grew 3.4%, considerably up from the previous +0.7% but below expectations of climbing 3.7%.

“Risks seem to be equally distributed, but signs of a modest uptrend have started to loom,” Tim Davis, Vice President and Global Strategist at TD Securities believes.

On Friday Brazil published annual CPI numbers for April, showing an acceleration to 6.28% from 6.15% and below consensus of +6.42%. Monthly IPCA inflation rose 0.67%, following a 0.92% increase.

The BBVA Bancomer Team of analysts comment that “although annual inflation continued to trend up (6.33% vs. 6.15% in March and 5.59% YoY in January), we expect the BCB to focus on the monthly deceleration and keep the Selic rate unchanged at 11.0% at its next meeting.”

Argentina’s annual GDP for Q4, also released on Friday, came in lower than expected at 1.4% following a 3.5% rise in Q3. Analysts expected more growth of 2.7%.

Technicals

Following the release of the inflation numbers on Friday the Brazilian real strengthened by 0.1% to 2.2128 against the greenback. On Monday USD/BRL was litlle changed at 2.2160

On Friday the USD/BRL daily FXStreet Trend Index was stronly bearish, with the OB/OS Index neutral. RSI was at 41 at the last close, and has risen to 59 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 104 pips, with ATR (14) shrinking at 229 pips. The 1D 200 SMA was at 2.3047, while the 1D 20 EMA was at 2.2341.

The Mexican peso was up by 0.06% at 12.9530 at the moment of writing

On Friday the USD/MXN daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI was at 36 at the last close, and has climbed to 53 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 512 pips, with ATR (14) expanding at 715 pips. The 1D 200 SMA was at 13.0903, while the 1D 20 EMA was at 13.0390.