• USDMXN rises for a second day, recovering from lows in months.
• Mexico: inflation falls from 8.70% to 8.41% in October.
• Banxico announces its monetary policy decision on Thursday.

USDMXN is rising for the second day in a row and reclaimed the key 19.50 level. The pair reached as high as 19.60 on Wednesday, against a stronger dollar in the market.

On Tuesday, USDMXN hit 19.40, the lowest level since March 2020, before beginning a bullish bounce. The dominant trend remains down, but a period of consolidation could be expected ahead, possibly between 19.80 and 19.50.

Elections and inflation

The mid-term elections in the US have not yielded definitive results yet. In any case, everything seems to indicate that there will be no major surprises and the Republicans will gain control of the House of Representatives and it remains to be seen what will happen to the Senate. The Republican victory is turning out to be less overwhelming than expected.

The market does not react significantly to the results and prepares for what will be the publication of the US October inflation data on Thursday, which is expected to have a broad impact throughout the market. The expectation is that the annual rate stands at 8% after a monthly rise of 0.7%.

In Mexico it became known on Wednesday that the Consumer Price Index rose in October 0.57%, slightly lower than expected. The annual rate went from 8.70% to 8.41%. The core CPI advanced 0.63% and the annual rate climbed to 8.41%, a new maximum in decades.

Thursday will be the meeting of the Board of Governors of the Bank of Mexico. A rise in the benchmark interest rate of 75 basis points from 9.25% to 10.0% is expected. The published inflation data has a double impact for the central bank authorities since they will celebrate the drop in the main index, but they will be concerned about the new advance in the core one.

Technical levels