The Mexican Peso has gained 0.26% against the US Dollar, diving below 16.60 in early Monday trading. Weak March Retail Sales data from INEGI was released ahead of the Q1 GDP and Banxico minutes, leading to concerns about the Mexican economy slowing down amid higher borrowing costs. Banxico’s Deputy Governor Espinosa’s hawkish stance contrasts with the US Fed’s cautious optimism on disinflation, causing market movements.
Retail Sales in March showed a decline of -0.2% MoM and -1.7% YoY, missing estimates and the previous month’s growth. Banxico’s Governor Ceja suggested lowering rates, while Deputy Governor Espinosa expressed concerns that March’s rate cut may have delayed inflation convergence. Leveraged funds and institutional asset managers increased their net long Peso positions, making the Mexican Peso the best-performing currency globally.
Atlanta Fed President Bostic stated that interest rates are likely to remain higher than in the past decade, with the Fed open to various economic scenarios. Investors are expecting a reduction of 33 basis points in Fed easing by the end of the year. Technical analysis shows the Mexican Peso continuing to rally against the USD, potentially reaching the current year-to-date low of 16.25.
Banxico, Mexico’s central bank, aims to maintain the value of the Mexican Peso and set monetary policy to control inflation within target levels. Interest rates play a key role in guiding monetary policy, with Banxico raising rates to combat high inflation and vice versa. Banxico meets eight times a year and closely follows the decisions of the US Federal Reserve to anticipate and react to monetary policy measures.
Overall, the Mexican Peso’s performance against the US Dollar is driven by a combination of economic indicators, central bank policy decisions, and global market trends. Investors and traders closely monitor data releases, central bank statements, and technical analysis to make informed decisions in the forex market. The upcoming release of GDP figures and Banxico minutes will provide further insights into the future direction of the Mexican Peso.
