- The dollar falls sharply after the CPI data for October in the United States.
- Banxico will announce the monetary policy decision: a last moderate increase?
- The USDMXN consolidates the bearish bias, 19.00 on the radar.
The USDMXN it went from 7:50 p.m. to 7:35 p.m., reaching a new cycle low. It is hovering around the 19.40 level, pressured by the US CPI figures that weighed on the dollar and pending Banxico’s decision.
The peso strengthens, while the dollar falls
The US Consumer Price Index (CPI) rose 0.4% in October, below the 0.6% market consensus. The annual reading fell to 7.7%, the lowest level since January. The dollar tumbled after reporting and share prices soared.
On Wall Street, the Dow Jones rises 2.45% and the Nasdaq 5.68%. US yields fall nearly 6%. The Dollar Index loses 1.77%, at the lowest point since mid-September.
The US inflation figures are good news not only for the Fed and the White House, but they should also rejoice in Mexico. Since the Fed is less aggressive in raising rates, Banxico could face less pressure.
The CPI report was published just as the Bank of Mexico holds its monetary policy meeting. The decision will be announced in a few hours. A rate hike of 75 basis points is expected, which would put the key rate at 10%. A dovish stance seems likely, not only after the US and Mexican inflation figures, but also because of the general decline in the dollar.
A dovish Banxico is not necessarily bad for the Mexican peso. US yields and risk appetite are also key drivers of MXN performance, which is among the biggest gainers so far in 2022.
Technical levels
Source: Fx Street
