After losses on Thursday, the Mexico Peso bounced back and gained about 0.50% versus the US dollar during the North American session.
The possibility that the Federal Reserve (Fed) will lower interest rates next week increased. This was due to the week’s mixed economic data from the US.
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After the Mexico Peso peaking at 20.26, the USD/MXN is now trading at 20.11.
Friday’s economic agenda in the US and Mexico is light. US import and export prices were included in the agenda. Import prices showed a slight increase. Export prices decreased in November.
Mexico’s economic data for the week showed that headline and underlying price inflation in November fell short of forecasts. This strengthened the argument for a different rate.
Daily digest market movers: Fed rate cut speculation boosts the Mexico peso
America November’s import prices increased by 0.1% MoM, matching October’s reading and exceeding forecasts of a -0.2% drop.
November export prices were flat at 0% MoM, down from 1% in October but above estimates of a -0.2% decline.
The swaps market predicts that Banxico will reduce its primary reference rate at the December 19 meeting from 10.25% to 10.00% (25 basis points).
Victoria Rodriguez Ceja, the governor of Banxico, is still dovish. She mentioned in her most recent interview with Reuters that the central bank will continue to cut borrowing costs. This is possible given the progress of disinflation.
JPMorgan analysts suggested that Banxico will cut rates by 50 basis points in light of inflation data.
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