- US inflation data triggered sharp runs in financial markets.
- The dollar initially soared but then gave back almost all of the gains.
- USD/MXN went from 20.23 to 20.47 and returned to 20.26.
The USD/MXN experiences hours of high volatility after the April inflation data from the United States. The pair jumped from 20.24 to 20.46, hitting a one-week high. It then started a pullback that brought it back below 20.30 where it is trading after the Wall Street open.
The Consumer Price Index in April rose 0.3% making the annual rate reach 8.3%, higher than the 8.1% of the market consensus and lower than the 8.5% of the previous month, which had been the highest in 41 years. Treasury yields soared after the price figures but then reversed. The 10-year tranche yields 2.98% after reaching 3.08%.
The moderation of dollar it helped the Mexican peso and the rest of the emerging currencies, which were also favored by the recovery of Wall Street after the opening. In the previous one, the futures rose more than 1%, but with the data they went into negative territory, and then went back to the rises after the first minutes of operations. The S&P rises 0.80% and the Dow Jones 0.63%. The same thing happened with metals and oil.
In Mexico on Thursday the decision of the Bank of Mexico will be known, which is expected to raise the interest rate again by 50 basis points from 6.50% to 7.00%. The US inflation data helped to confirm the expectations of more increases in the US and therefore it would also be expected that they continue like this in the neighboring country for a few more months.
Technical levels
Source: Fx Street
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