The Mexican Peso has experienced some ups and downs against the US Dollar recently, with a weekly decline of over 2%. The Federal Reserve’s inflation measure, the PCE Price Index, showed steady inflation, leading to expectations of a rate cut by the Fed. Additionally, talks of judiciary reform in Mexico starting on August 1 have sparked economic and political concerns.
Despite some losses, the Mexican Peso managed to recover slightly against the US Dollar, trading at 18.39, down 0.28%. The US Dollar weakened, leading to gains on Wall Street and a modest rise in the peso. Inflation data in the US showed signs of stability, with analysts suggesting that the Fed could potentially ease policy in September.
The University of Michigan’s Consumer Sentiment was higher than expected, but still lower than the previous month. Inflation expectations for the short and long term remained relatively stable. Additionally, traders are pricing in a possibility of easing by the end of the year, as indicated by futures contracts.
Looking ahead, Mexico’s mid-month inflation data could influence the Bank of Mexico’s decision on policy easing. Analysts are projecting higher annual inflation rates and lower economic growth for Mexico. The US PCE in June met expectations, with core PCE figures slightly above estimates.
From a technical analysis perspective, the USD/MXN pair remains on an upward trend, despite some recent weakening of the Peso. Buyers need to surpass the 18.50 mark to accelerate the trend, with resistance levels at 18.99 and 19.23. On the other hand, a retreat below 18.00 could signal a potential decline to support levels at 17.74 and 17.58.
The Mexican Peso’s value is influenced by various factors such as the performance of the Mexican economy, central bank policies, foreign investments, and geopolitical trends. The central bank aims to maintain low and stable inflation levels, adjusting interest rates accordingly. Macroeconomic data releases and market sentiment also play a significant role in determining the Peso’s valuation.
As an emerging-market currency, the Mexican Peso tends to perform well during low-risk periods and struggle during market turbulence. Investors should conduct thorough research and consider the risks involved before making any investment decisions. The information provided here is for informational purposes only and should not be considered as investment advice.