Inside the Currency Market: MXN

The Bank of Mexico is similar to the central banks of Columbia and the SNB in Switzerland in that most vital reports, research and information is published exclusively in the native languages although the SNB publishes most vital info in German then French to represent their historic ties dating to Charlemagne in the 9th century. Thankfully I speak, read and write in Spanish to include the various dialects. Prior to Mexican independence from Spain in 1821, Mexico shared relations with Japan at the highest Governmental levels as it related to travel permits. Shoguns met Presidents. The most important relations that solidified the relationship was the Treaty of Amity, Commerce and Navigation in 1888. Japan terms this treaty the first :equal” relationship with a Western nation. Emigration from Japan began in 1897 as 35 Japanese citizens settled in the Mexican state of Chiapas in the south of Mexico although Acapulco later shared almost an equal destination point. For Japanese citizens, it was the first foray into Latin America. Today, 8,100 Japanese citizens reside in Mexico as 679 Japanese companies are incorporated in Mexico and represents 4% of total Foreign Direct Investment in Mexico. The US dollar equivalent is 1, 538.4 million as of January – OCT 2013. Mexico reports bilateral trade valued at USD 17,954 million January = OCT 2013 as Mexican exports to Japan are valued at USD 3, 563 million with exports in Agriculture, Auto parts, machinery, electronics, chemicals and Optical instruments. Relations then blossomed as Cultural agreements were signed in 1954, Trade agreements in 1969, Aviation in 1972, Tourism in 1978 and two most vital agreements in 1996 Avoidance of Double Taxation and Trade Agreement in 2005. Since 2005, Bilateral trade represents USD 22 Billion, Mexican exports USD 4.4 billion and Japanese exports to Mexico USD 17.6 billion. Japanese companies won many energy contracts in Mexico to supply electricity, same scenario in Turkey and other nations. For Japan since 2005, the methodology has been to expand their presence in other nations to assist to secure needed products in Japan’s manufacturing base and secure oil as Japan has the historic polemic as oil must be imported. Treaties on Double Taxation began in the 1950’s for all nations. Double taxation destroys trade if both nations tax each other. It began the slow progression to full blown currency trading seen today. So MXN/JPY historically is a vital currency pair to both japan and Mexico but more so for Mexico since 83% of Mexican exports travel to the United States. MXN/JPY is monitored, tracked and reported heavily by Mexico and its based on its historic ties to Japan. All Info and Data is derived from official Government sources.

MXN/USD. Bottom 16.0836. Range break below 16.0028, Above 16.3261. Overbought Sell point 16.2735 then reverse short to target near bottom at 16.0836. Points on the way up, 16.1870, 16.2097, 16.2157, 16.2218, 16.2476, 16.2735.

Brian Twomey, Inside the Currency Market, btwomey.com

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