- The USD/MXN marginally decides 0.04% on Friday, reaching a minimum of the day at 19,4352.
- The dollar index (DXY) earns 0.33% daily, reaching maximums of three sessions in 101.26.
- The consumer’s feeling index of the University of Michigan was 50.8 points in May, disappointing market estimates.
- The focus of the operators will be placed on the Gross Domestic Product of Mexico, to be released next Thursday, May 22.
The USD/MXN reacted down from May 13 in 19,5661, finding vendors who brought parity to a minimum of the day in 19,4352. At the time of writing, the USD/MXN operates over 19,4813, falling 0.04% daily.
The Mexican weight remains stable after the decrease of Banxico rates
After the cut in 50 basic points by the Bank of Mexico, the Mexican weight records a marginal advance, while the USD/MXN goes back 0.12% today, oscillating within the operational range of the previous session at 19.47.
The attention of investors will be on the Gross Domestic Product of Mexico, to be published on May 22. The consensus of analysts awaits a 0.6% increase in the first quarter of the year, compared to the increase of 0.8% of the previous quarter. Similarly, the operators will have the focus on the inflation of the first half of May, which registered an increase of 0.12% in the previous period.
The US dollar rebounds after a feeling of the US consumer
The feeling of the consumer of the University of Michigan fell to 50.8 points in May from 52.2 observed the previous month. This figure disappoints the estimates of the consensus of 53.4 points.
On the other hand, the consumer expectations index backed 46.5, below market estimates. As for inflation expectations, they increased to 7.3% from 6.5%, while five -year expectation rose to 4.6% from 4.4%.
In this sense, the dollar index (DXY) rebounds 0.33% in the day, reacting up to May 14 in 100.52 until reaching maximums of May 13 in 101.26.
USD/MXN Price levels
The USD/MXN reacted down from a short -term resistance given by the maximum of May 6 in 19.68. Downwards, the key support is located on 19.02 minimum of August 23, 2024. The next important support level is observed in 18.59, pivot point of August 16, 2024.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
