- Mexican peso rises versus US Dollar, continues to recover from Urzúa’s resignation losses.
- USD/MXN trades below 19.10, but still above the level it had a week ago.
The USD/MXN is trading at 19.08 at the lowest since Tuesday, supported by the improvement in risk appetite. Earlier today the pair peaked at 19.16 and during the American session turned to the downside.
“Today it was published that U.S. underlying consumer prices increased by the most in nearly 18 months in June. Excluding the volatile food and energy prices, core inflation rose 0.3% m/m in June. However, the market will likely not change expectations that the Federal Reserve will cut interest rates this month”, wrote BBVA analysts.
US CPI data pushed the greenback modestly to the upside and sent US yield significantly higher. The US Dollar straightened against majors but kept a bearish tone versus most of the emerging market currencies, particularly Latin Americans.
The USD/MXN is about to post the second decline in a row as it retreat further from the peak it reached on Tuesday at 19.36 following the resignation of Carlos Urzúa as Finance Secretary. Still, it is positive for the week but the pressure on the Mexican peso eased.
Banxico: One member ask for a rate cut
The minutes from the last meeting of the Bank of Mexico showed that Board member Gerardo Esquivel-Hernández voted in favor of reducing rate 25 basis points to 8.00%, against the majority that favored a no change. The meeting took place before the last move higher of USD/MXN that followed the resignation of the Finance Secretary.
According to Esquivel inflation has exhibited a better performance than the one forecasted in previous Quarterly Reports and is on a convergent path to the target. “I estimate that by December 2019, inflation will be very close to or even below 3.4%, that is, in line with the forecasts of last year’s Quarterly Reports. In addition to the above, there are other elements that must be considered in the determination of the target interest rate: the announced loosening of the monetary policy of advanced economies and the noticeable economic deceleration in the country. These factors open a space to be able to cut the interest rate in 25 basis points without putting at risk nor compromising the fundamental mandate of Banco de México.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.