- Mexican peso remains firm against the dollar.
- Rise in the stock markets and general weakness of the dollar take the USD/MXN below 20.00.
The USD/MXN is falling again, accumulating four days in a row. The pair is back below 20.00 and closing below could suggest more downside ahead.
On Thursday the pair hit new lows in a month and a half at 19.90, before rebounding to 19.95. The bias remains bearish, with some technical indicators already at oversold levels.
Central banks and data
US data again showed falling inflation. On Wednesday it was the consumer price index and on Thursday it was the turn of wholesale inflation. The PPI had an unexpected setback in July. The data helped keep the dollar weak, but this time it had no impact on bond yields. In another report, a rise in unemployment subsidy requests was known, to a maximum in weeks, but they still showed a healthy labor market.
Despite the drop in inflation, the expectation continues to be for more increases in the interest rate by the Federal Reserve, although it is estimated that there will be a smaller adjustment than expected prior to this week’s data.
In a few hours, the Bank of Mexico will announce the monetary policy decision. The expectation is that the central bank will raise the benchmark interest rate by 75 basis points to 8.50%. Inflation rose in July to 8.15%, a new cycle high. It is also estimated that today’s, if it occurs, would not be the last rise.
Technical levels
Source: Fx Street
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