The Dollar jumps to 17.10 against the Mexican Peso after falling to one-week lows at 16.90

• USD/MXN recovers from one-week lows at 16.90 and returns above 17.00.
• The dollar briefly weakened following mixed U.S. durable goods orders data.
• Mexico's monthly inflation grew by 0.09% in the first half of April, compared to the -0.03% expected.

The USD/MXN fell to a one-week low of 16.90 immediately after news that Mexico's monthly inflation in the first half of April was higher than expected. Following mixed US Durable Goods Orders data, the pair regained ground, hitting a daily high at 17.10.

The Dollar remains firm after durable goods requests despite the initial setback

Durable goods orders from the United States showed a 2.6% monthly increase in March, but the February data was revised downwards, placing that month's growth at 0.7% compared to the 1.4% previously published. Excluding defense, claims increased 2.3%, exceeding the previous 1.5% but disappointing the 2.5% estimate.

The Dollar Index (DXY) reacted to this release with a brief drop to around 105.75, but in the last hour it has regained ground and is moving around 105.88, not far from the day's high at 105.94.

The pair's traders now await the important US data that will be released on Thursday and Friday. Tomorrow the preliminary GDP for the first quarter will be released, which could slow to 2.5% compared to the previous 3.4%, and on Friday the underlying inflation measure of personal consumption expenditure (PCE) for March will be released, which is expected to moderate to 2.6% year-on-year from 2.8% previously. Both data could generate significant volatility in the Dollar.

Mexico's inflation in the first half of April exceeded expectations

The Consumer Price Index (CPI) of Mexico rose 0.09% monthly in the first half of April, after growing 0.27% in the previous fortnight, as published by the National Institute of Geography and Statistics (INEGI). The data has worsened the -0.03% forecasts expected by the market. With this result, annual general inflation stood at 4.63%.
Core inflation, however, has increased by 0.16%, as expected.

This increase in forecasts reinforces the perspective of the Central Bank of Mexico (Banxico), whose governor, Victoria Rodríguez Ceja, noted that they would maintain the restrictive stance until they saw clear evidence of a moderation in inflation towards the 3% objective.

USD/MXN Price Levels

With the Dollar trading above 17.10 against the Mexican Peso, gaining 0.79% daily, the next upside target is at the weekly ceiling reached on Monday, April 22 at 17.23. Above, the advance will be likely to reach the five-month highs reached on April 19 at 17.92.

On the downside, a break below today's low at 16.90 could trigger a pullback towards 16.54, last week's low.