The Mexican Peso (MXN) is making significant gains against the US Dollar (USD) following the release of lower-than-expected US Producer Price Index (PPI) data. This has weakened the USD and increased the likelihood of a 0.50% interest rate cut by the Federal Reserve in September.
The CME FedWatch tool now predicts a 55.5% probability of a rate cut in September, up from around 50% before the PPI data release. The US PPI rose 0.1% in July, matching expectations but falling below the previous month’s figure. Year-over-year, the PPI eased to 2.2%, below expectations of 2.3%.
At the moment, one USD buys 18.98 Mexican Pesos, EUR/MXN trades at 20.77, and GBP/MXN at 24.29.
Mexican Peso Drops After Weak Consumer Data and Banxico Comments
The Mexican Peso experienced a decline on Monday due to weak Consumer Confidence data and comments from the Bank of Mexico (Banxico) Governor. Consumer Confidence fell to 46.9 in July from a five-year high in June, while the Banxico Governor supported a recent interest rate cut.
The technical analysis for USD/MXN suggests a correction within a downward move, with potential support levels at 18.35 and the 200-period Simple Moving Average. A break below 18.97 would confirm a further decline in the pair.
Overall, the Mexican Peso’s performance is tied to US economic data and Fed interest rate decisions, making it important for investors to monitor these factors for potential trading opportunities.