With the US & Canada closed for the national holidays, skeleton crews are manning FX desks in New York this morning. Consequently the ability and/or desire to transact business in the regional Latam currencies is somewhat subdued. Spot USD/MXN opened at 11.0675, exactly where it closed on Friday afternoon. USD/BRL opened on the BM&F futures market at 2.1725, little changed from Friday's 2.1730 close, and has traded up to 2.1740.
News of the North Korean nuclear test left Asian EM markets in disarray, with losses in virtually all centres - which is kicking off the regional currencies in this time zone on a weaker sentiment footing. Local focus is on political issues, in Brazil the presidential election, and in Mexico escalating tensions in Oaxaca where three policemen were captured and beaten by protesters over the weekend. The policemen were later released. The striking teachers have rejected the government's most recent offer and are demanding the ouster of Oaxaca Governor Ruiz. In the current environment we expect the Mexican Peso to remain little changed to marginally weaker, whereas the Real may garner some strength from commercial dollar sales from local exporters.
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