Tin tức thì trường
09.05.2024, 16:47

Mexican Peso gains as inflation data tempers Banxico rate cut expectations

  • Mexican Peso strengthens as the USD/MXN drops 0.21%, following April’s hot inflation report
  • Consumer Price Index data shows prices remain above Banxico’s target range, hinting it may hold rates at 11.00%.
  • USD/MXN traders’ eye upcoming decisions from Banxico and its updates to economic projections.

The Mexican Peso appreciated against the US Dollar after the latest inflation data increasing the likelihood that the Bank of Mexico (Banxico) will keep rates unchanged. Headline figures on a monthly and annual basis exceeded forecasts, but underlying measures edged slightly lower. The USD/MXN trades at 16.86, down 0.21%.

Mexico’s economic docket revealed that the Consumer Price Index (CPI) for April showed that prices remain above Banxico’s 3% plus or minus 1% goal, which would likely prevent the Mexican central bank from continuing to ease policy.

Looking ahead, Banxico, under the leadership of Governor Victoria Rodriguez Ceja, is expected to keep rates unchanged at 11.00% by most analysts as inflation reaccelerated last month. However, it's crucial to note that Mexico’s economy has shown signs of weakness, largely due to the economic slowdown in the United States (US). This factor could significantly influence the future of the Mexican Peso.

Therefore, USD/MXN traders should watch Banxico’s Governing Council's decision and the update on economic projections.

Across the border, the US jobs market continued to show signs of cooling, with the number of Americans filling out unemployment benefits crushing estimates. Later, San Francisco Fed President Mary Daly will cross the newswires.

Daily digest market movers: Inflation in Mexico rises ahead of Banxico’s decision

  • Mexican Core CPI in April increased by 0.21% MoM, below the expected 0.24% and significantly lower than the previous month's increase of 0.44%. Meanwhile, headline CPI moderated to 0.20%, slightly above the forecast of 0.19% but below the prior month's 0.29%.
  • On an annual basis, underlying inflation rose by 4.37%, below estimates of 4.40% and March’s 4.55%. Headline inflation ticked up to 4.65%, up from 4.42%, exceeding forecasts of 4.63%.
  • Most bank analysts predict that Banxico will keep interest rates steady with a unanimous decision expected from the Governing Council. However, future meetings are anticipated to be more contentious, potentially leading to divided votes. This expectation arises from comments by two Deputy Governors, Irene Espinosa and Jonathan Heath, who have stated that inflation is still elevated, necessitating that interest rates stay put.
  • US Department of Labor revealed that Initial Jobless Claims for the week ending May 4 increased by 231K, above estimates of 210K, up from the previous week's 209K.
  • US labor market continues to cool. April’s Nonfarm Payrolls and the release of the latest unemployment claims data can put pressure on Fed officials, who acknowledged that risks to achieving its dual mandate on employment and inflation “moved toward better balance over the past year.”
  • Data from the futures market see odds for a quarter percentage point Fed rate cut in September at 86%, versus 55% ahead of last week’s FOMC decision.

Technical analysis: Mexican Peso gains traction as USD/MXN tumbles below 16.90

The USD/MXN remains biased to the downside, showcasinging the Peso’s strength as sellers remain in charge. Momentum depicted by the Relative Strength Index (RSI) in bearish territory hints that the exotic pair can be testing the 50-day Simple Moving Average (SMA) at 16.79, which is the immediate support level in the short term.

Once cleared, the USD/MXN would test the 2023 low of 16.62, followed by the current year-to-date low of 16.25.

On the other hand, if buyers claim the 100-day SMA at 16.93, that could sponsor a leg up to the 17.00 psychological level. A breach of the latter would expose the 200-day SMA at 17.17, followed by the January 23 swing high of 17.38 and the year-to-date high of 17.92.

Mexican Peso FAQs

The Mexican Peso (MXN) is the most traded currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the country’s central bank’s policy, the amount of foreign investment in the country and even the levels of remittances sent by Mexicans who live abroad, particularly in the United States. Geopolitical trends can also move MXN: for example, the process of nearshoring – or the decision by some firms to relocate manufacturing capacity and supply chains closer to their home countries – is also seen as a catalyst for the Mexican currency as the country is considered a key manufacturing hub in the American continent. Another catalyst for MXN is Oil prices as Mexico is a key exporter of the commodity.

The main objective of Mexico’s central bank, also known as Banxico, is to maintain inflation at low and stable levels (at or close to its target of 3%, the midpoint in a tolerance band of between 2% and 4%). To this end, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will attempt to tame it by raising interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the overall economy. Higher interest rates are generally positive for the Mexican Peso (MXN) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.

Macroeconomic data releases are key to assess the state of the economy and can have an impact on the Mexican Peso (MXN) valuation. A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only does it attract more foreign investment but it may encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this strength comes together with elevated inflation. However, if economic data is weak, MXN is likely to depreciate.

As an emerging-market currency, the Mexican Peso (MXN) tends to strive during risk-on periods, or when investors perceive that broader market risks are low and thus are eager to engage with investments that carry a higher risk. Conversely, MXN tends to weaken at times of market turbulence or economic uncertainty as investors tend to sell higher-risk assets and flee to the more-stable safe havens.

 

© 2000-2024. Bản quyền Teletrade.

Trang web này được quản lý bởi Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

Thông tin trên trang web không phải là cơ sở để đưa ra quyết định đầu tư và chỉ được cung cấp cho mục đích làm quen.

AML Website summary

Cảnh báo rủi ro

Giao dịch trên thị trường tài chính (đặc biệt là giao dịch sử dụng các công cụ biên) mở ra những cơ hội lớn và tạo điều kiện cho các nhà đầu tư sẵn sàng mạo hiểm để thu lợi nhuận, tuy nhiên nó mang trong mình nguy cơ rủi ro khá cao. Chính vì vậy trước khi tiến hành giao dịch cần phải xem xét mọi mặt vấn đề chấp nhận tiến hành giao dịch cụ thể xét theo quan điểm của nguồn lực tài chính sẵn có và mức độ am hiểu thị trường tài chính.

Chính sách bảo mật

Sử dụng thông tin: sử dụng toàn bộ hay riêng biệt các dữ liệu trên trang web của công ty TeleTrade như một nguồn cung cấp thông tin nhất định. Việc sử dụng tư liệu từ trang web cần kèm theo liên kết đến trang teletrade.vn. Việc tự động thu thập số liệu cũng như thông tin từ trang web TeleTrade đều không được phép.

Xin vui lòng liên hệ với pr@teletrade.global nếu có câu hỏi.

Chuyển khoản
ngân hàng
Feedback
Hỏi đáp Online E-mail
Lên trên
Chọn ngôn ngữ / vùng miền