Mexican Peso Plummets as Market Focuses on Inflation and GDP Data

The Mexican Peso experienced a sharp drop, trading at 18.09 as investors eagerly await upcoming inflation and GDP data releases. The US Dollar saw mild gains amidst falling US Treasury bond yields, impacting the exchange rate. The market is closely monitoring Mexico’s mid-month inflation figures, which could influence the path of the currency. Retail sales in May missed expectations, painting a bleak picture of Mexico’s economy.

Economists predict a 25-basis point rate cut by Banxico in August, leading to a revision of the year-end USD/MXN forecast to 18.80. The USD/MXN currently trades at 18.12, bouncing back from daily lows at 17.90.

Analysis and Breakdown:

The recent sharp drop in the Mexican Peso against the US Dollar has raised concerns among market participants. The upcoming release of inflation and GDP data will play a crucial role in determining the currency’s future trajectory. With economists expecting a rate cut by Banxico and revising the year-end forecast, investors are preparing for potential changes in the exchange rate.

On the US front, developments such as President Biden’s decision to step aside from the Presidential race and endorse Vice President Harris have also impacted market sentiments. Expectations of a Fed rate cut in September based on inflation data and the release of US GDP figures add to the market uncertainty.

Overall, the economic indicators and policy decisions in both Mexico and the US will have a significant impact on the USD/MXN exchange rate. Investors should closely monitor upcoming data releases and central bank announcements to make informed decisions about their investments and financial strategies.

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