Unlocking Market Insights: Mexican Peso in Focus
Mexican Peso Reacts to US Economic Data
- The Mexican Peso showed resilience against the US Dollar, gaining 0.30% following better-than-expected US Retail Sales data.
- The Federal Reserve (Fed) is expected to cut rates by 50 basis points (bps) despite positive US economic indicators.
- USD/MXN pair currently trades at 19.18 after reaching a daily high of 19.40.
The recent data from the US Commerce Department revealed that August Retail Sales exceeded expectations, indicating consumer resilience amidst moderate hiring and wage growth. Additionally, Industrial Production in August rebounded after a contraction in July.
The US Dollar Index (DXY) climbed by 0.20% to 100.92, with a 61% probability of a 50 bps rate cut by the Fed. The Atlanta Fed GDP Now Index forecasts Q3 GDP figures at 3%, up from 2.5%.
Upcoming Economic Events
- Wednesday will see the release of Mexico’s Q2 Aggregate Demand and Private Spending data.
- The US economic calendar includes housing data ahead of the FOMC monetary policy decision and Fed Chairman Jerome Powell’s statements.
Market Analysis: Key Insights
- USD/MXN driven by market sentiment and expectations of a significant Fed rate cut.
- US Retail Sales in August rose by 0.1% MoM, while Industrial Production increased by 0.8% MoM.
- Fed funds rate futures contract for December 2024 indicates a potential 111 basis point cut by the Fed this year.
Technical Perspective: USD/MXN Outlook
The USD/MXN pair remains bullish despite a recent dip, with key resistance at 19.50 and support at 19.15.
If USD/MXN surpasses 19.50, the next target is the psychological level of 20.00. Conversely, a drop below 19.15 could lead to further support levels at 19.02 and the 50-day SMA at 18.99.
Mexican Peso FAQs
Curious about the Mexican Peso (MXN)? Here are some common questions answered:
- MXN value influenced by Mexican economy, central bank policy, foreign investment, and geopolitical trends.
- Banxico aims to maintain inflation at 3% by adjusting interest rates – higher rates strengthen MXN.
- Macroeconomic data impacts MXN valuation, with a strong economy boosting the currency.
- MXN thrives in risk-on periods and weakens during market turbulence.