- The USD/MXN falls 0.31% in the first day of the week, reaching minimums not seen since August 23, 2024.
- The dollar index (dy) goes back 0.24% daily, currently quoting over 98.96.
- The general inflation of Mexico rises to 4.42% annual in May, reaching levels not seen since November 2024.
The USD/MXN marked a maximum of the day in 19.11, finding aggressive vendors that led parity to a minimum not seen since August 23, 2024 at 19.0482. At the time of writing, the USD/MXN operates over 19,0650, falling 0.31% the day.
Mexico inflation increases to six months
According to information released by the National Institute of Geography and Statistics (INEGI), general inflation increased to 4.42% annual in May from 3.93% observed in April, reaching levels not seen since November 2024.
At the same time, monthly inflation advanced 0.28% in the same period, less than 0.33% registered in April. On the other hand, the underlying consumer price index rose 0.30% monthly, compared to 0.49% registered in the previous period.
On the other hand, the underlying IPC, which does not consider food and energy, increased a 0.30% monthly compared to the previous 0.49%. The underlying inflation increased to 4.06% per year, from 3.93% registered in April.
The dollar (DXY) index reacted down from a maximum of the day in 99.23, attracting vendors that dragged the index to a minimum daily in 98.82, consolidating within the June 6 range on 98.99.
USD/MXN Price levels
The USD/MXN for a short -term resistance given by the maximum of June 6 in 19.22. The next key resistance is observed in 19.28, maximum of June 3 in convergence with 61 8% fibonacci. Downwards, the important support is found in 18.59, pivot point of August 16, 2024.
1 hour graph of USD/MXN
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.
