USD/MXN started the week with a largely neutral bias despite broad-based dollar weakness reflected in the DXY Index, even as concerns over rising COVID-19 cases and fragile market sentiment persisted. At the New York close, the pair was broadly flat, trading around the 20.00 mark.
At the index level, the DXY’s retreat responded in part to soft U.S housing data released earlier in the day. According to the Census Bureau, new home sales rose by 676,000 units, the lowest level since April 2020 and far below consensus of 798,000. The poor results suggest that the housing market have peaked, a fact that may strengthen the argument that inflation is transitory and that Fed monetary stimulus may still be necessary to support the recovery.
