- The Mexican peso is cautious to the imminent consumer confidence and the orders of the US durable goods.
- The hard line of Kashkari of the Fed underlines the uncertainty around trade, supporting the position of the central bank to maintain stable interest rates.
- The USD/MXN faces resistance in the line of trend in 19.29, but remains in a broader bearish trend.
The Mexican peso (MXN) is losing impulse against the US dollar (USD) a few hours before the US session begins, while the dollar tries a recovery.
With the liquidity returning to the markets after the weekend of the day of the fallen in the US, the mass sale in the bond markets has temporarily paused.
Despite an increase in the feeling of risk and a slight setback in the Mexican weight, the USD/MXN remains stable in a tight range.
At the time of writing, the pair of currency of emerging markets (EM) follows a descending trajectory after its fall in April. However, a modest recovery has pushed it towards the resistance of the trend line in 19.29.
Demand and feeling indicators in the US at the Center for Care Before Clave Policy Signals
The attention focuses on the report of orders for lasting goods of the USA for April on Tuesday. The indicator tracks the new orders made to US manufacturers for lasting goods, which means planned goods to last three years or more, providing a measure of industrial activity.
The markets prepare for a strong reversal in the orders of the US last goods in April, with forecasts that point to a 7.9% contraction in the main figure, compared to the robust increase of 9.2% observed in March. This would reflect a possible impact of trade -related interruptions.
Later in the day, at 14:00 GMT, the US Board Conference will publish its consumer confidence index for May. After falling to a minimum post-pandemic of 86.0 in April, the next figure will provide more information on the economic perspectives of US households, amid increasing tax and geopolitical uncertainties.
Kashkari of the Fed inserts to patience, highlighting uncertainty for economic clashes,
Neel Kashkari, president of the Federal Reserve Bank (FED) of Minneapolis, provided a temporary impulse in trust on Tuesday. When speaking at the Tokyo Summit, where bankers, responsible for policies and economists to discuss, maintained a Hawkish tone for monetary policy.
To conclude his speech, Kashkari declared that “massive clashes create uncertainty for policies, both in the understanding of the underlying dynamics of the clashes themselves and, for some clashes, in the determination of the appropriate political response. At such time, take the time to obtain more information that helps to inform the collective judgments of those responsible for policies can be the best of an imperfect set of options,” The official site of the Bank of the Federal Reserve of Minneapolis.
These comments reaffirm the narrative of the Fed that it is likely that interest rates will remain at the current levels until the impact of the tariffs of US President Trump in the economy becomes clearer.
Daily summary of the Mexican peso: consumer confidence in the USA threats USD/MXN
- With the FED reiterating its ‘Data Dependent’ position, the orders for the US last goods and the US consumer confidence data that will be published later in the day are at the Center for Care.
- On Wednesday, the minutes of the meeting of the Federal Open Market Committee (FOMC) of May will provide additional information about the Central Bank decision to maintain interest rates at the current levels and the possible trajectory of the short -term monetary policy.
- Market participants are waiting for the publication of the Fed’s favorite inflation measure, which are the data of the Personal Consumption Expenditure (PCE) of the United States for April, as well as the feeling figures of the consumer of the University of Michigan, both scheduled for publication on Friday.
- These data points are crucial to understand the inflation and feeling of the consumer, since they measure the feelings of US citizens about the current economic situation. Both factors influence expectations about when the Federal Reserve (FED) could consider cutting interest rates.
Technical analysis of the Mexican weight: the USD/MXN bounces towards the resistance of the trend line, the bearish pressure persists
The USD/MXN continues to operate within a bassist trend, with limited prices below the simple mobile average (SMA) of 10 days in 19.33.
After reaching a new minimum of the year below 19.20 on Monday, a modest rebound in the US dollar has pushed the torque towards the resistance of the trend line of the fall of April in 19.29.
Momentum indicators are still weak, with the relative force index (RSI) flattening in 36.47, indicating that, although there is bassist momentum present, the market is not yet in overall territory.
With the currently intact bearish, a break below 19.20 could attract attention to the minimum of October in 19.11, which serves as the next level of significant support.
A sustained rupture below this level could open the door to deeper falls around 19.00, while any rebound would first need to recover 19.47 to change the feeling in the short term.
USD/MXN daily graphics
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
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.
