- The USD/MXN falls to a daily minimum of 19.50 after the United States CPI.
- The US dollar weakens with the decrease in inflation and the possibility of a fed rate cut in June.
- American inflation is moderated to 2.3% annually in April compared to the expected 2.4%.
- The focus of the week revolves to the decision of interest rates of Banxico.
The USD/MXN has dropped this Tuesday from a daily maximum of 19.64 to a minimum of the day at 19.50. The fall has accentuated after the publication of US inflation data, which were weaker than expected. The par quotes now about 19.50, losing 0.69% in what we have been in day.
The US dollar weakens with inflation, focus on the Fed
The US dollar index (DXY) has lost part of the profits recorded yesterday after the agreement between the US and China on Tuesday to reduce tariffs. The cause of this descent is in the inflation, which was moderated in the United States at a rate of 2.3% annual in Aprilcompared to the previous 2.4%. The green ticket, which yesterday reached a one -month roof in 101.98, has fallen after the IPC to 101.30, and now moves around 101.38, giving 0.43% daily.
The American CPI has also moderated in the monthly readings of the general and underlying index, since both have risen 0.2% in April, below the planned 0.3%. Annual inflation excluding food and energy has remained unchanged in 2.8%.
The moderation of inflation has turned the look at the Fed, taking into account this data could reduce your interest rates at your next meeting, on June 18. The Fedwatch tool sees only 8.2% of probabilities of a type cuts as soon. For July, the possibilities increase to 38.6% and in September they are 77.1%.
Banxico will decide on your interest rates on Thursday
This Thursday at 7:00 p.m., the Central Bank of Mexico will announce its monetary policy decision. The entity is expected to cut interest rates at 50 basic points to 8.5%. Any surprise in the ad could generate volatility in the USD/MXN.
Yesterday, Mexican president Claudia Sheinbaum, got a second pact to contain inflation of 24 basic products. The renewal of the PACIC, as the agreement is known, was carried out with the consensus of agricultural producers and self -service stores.
USD/MNX Price levels
The trend in the USD/mxn is neutral tending down in short and long term graphics, although according to the relative force index (RSI) of 14 in one -hour graphic and one day it has More space to fall in the next few hours.
Down, the main support is now in 19.42, minimum of 2025 recorded yesterday Monday. A rupture of this level would point towards 19.11/19.06, soils in October and September 2024, respectively.
Upwards, the first resistance appears in 19.55, mobile average of 100 periods in time graph. Above this region, the USD/MXN could rise to 19.66, a maximum of six days reached yesterday, before trying to reach the 19.78 barrier, May roof reached on day 6.
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.
