- 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.
