- Mexican peso progresses because USD/MXN plunges below 19.90, which is a decrease of 1%.
- Peso shrugs Mexican industrial production of Mexico and decreases concerns about consumer trust supports the recession.
- The American consumer sentiment rises in the growing expectations of inflation, driven by the upcoming Trump administration tariffs.
The Mexican Peso (MXN) gathered against the US dollar (USD) on Friday and ignored the softer than the expected economic data revealed during the week indicating that the economy could slow down. Deterioration of the consumer’s sentiment in United States (USA) put pressure on the greenback that is ready to complete the week of losses. USD/MXN trades 19.86, which is more than 1%.
The market mood has become a hovering, tail for developing market currency. DISMAL Messages in Consumer and Industrial Production In Mexico are drawing gloomy economic outlookFurther confirmed by the director of economic research by Banco de Mexico (Banxico) Alejandrina Salcedo cisneros.
She commented that uncertainty affects the country’s business and indicates a view of a slight expansion of regional economies. Banxico estimated economic contraction in all regions of the country. At the national level, a growth of -0.6 % in the 4th quarter compared to the previous quarter in seasonally modified numbers.
In the US, the University of Michigan (UOM) consumer sentiment (UOM), while inflation’s expectations focused on higher thanks to the US President Trump tariffs.
The eyes of traders are located on the political decision of the federal reserve system of the Federal Reserve (Fed). Last Friday, Fed Chairman Jerome Powell revealed that “market rates of inflation expectations have shifted up, driven tariffs”.
Next week, traders will look at retail sales, housing data, Fed’s monetary policy and economic projection.
Daily Digest Market Movers: Mexican peso tension as Greenback weakens
- Mexican industrial production plunges at -2.9%, worse than -2.7% of December along the deterioration of consumer confidence suggests that Mexican peso could be depreciated despite the continued observed profits, which are usually caused by the overall weakness in the US dollar.
- The economy in Mexico slows down sharply, as the privacy analysts who have asked Banco de Mexico (Banxico) assume. They expect to grow to 0.81%.
- Banxico is expected to continue to alleviate the policy of meeting on March 27, which stimulated the development of the disinfectment process and the stagnant economy.
- On Wednesday, the Minister of Mexican Finance Edgar Amador Zamora said that the national economy is expanding, but shows signs of retardation associated with business voltage with the US.
- The survey of the Sentiment of the University of Michigan (UOM) has shown that in March the sentiment deteriorated from 64.7 to 57.9, below the prognosis 63.1. Especially the expectations of inflation jumped with the Americans when they saw that 12 months of inflation increased from 4.3% to 4.9%. During the five -year period, consumers recorded prices over 3.9%, from 3.5%.
- Futures traders on the money market were awarded at 67 Basic Points of Fed’s release at the end of the year, compared to 74 per day.
- Reuters’ survey showed that 70 out of 74 economists claim that the risk of recession has increased in the US, Canada and Mexico.
- In the Koter, trade disputes between the US and Mexico are in front and center. If the country reaches an agreement, it could prepare a way for recovering a Mexican currency. Otherwise, another USD/MXN is perceived, because US tariffs could cause a recession in Mexico.
USD/MXN Technical outlook: Mexican peso voltage when USD/MXN collapses below 20.00
USD/MXN finally cleaned the number 20.00 and earlier during the North American meeting, the fourth month minimum hit 19.84. Momentum favors another disadvantage on the steam, as shown by the Relative Force Index (RSI), which changes and closes into the pre -selling area. The path of the least resistance is therefore tilted to the disadvantage.
The first USD/MXN support would be a 200 -day simple gliding average (SMA) at 19.67. If it was overcome, another stop would be the character 19.50, before 18 September swing lower 19.06. For bull restoration, the first level of the ceiling of the couple is 20.00. The decisive break will reveal a 100 -day SMA at 20.35.
Banxico FAQ
Mexico, also known as Banxico, is a central bank of the country. Its mission is to maintain the value of Mexican currency, Mexican peso (MXN) and determine monetary policy. For this purpose, its main goal is to maintain low and stable inflation at the target level – at or near the target 3%, center in the tolerance zone between 2%and 4%.
The main tool for Banxiko for monetary policy management is to determine interest rates. When inflation is above the goal, the bank will try to tame it by raising rates, making it more expensive for households and businesses to borrow money and thus cool the economy. Higher interest rates are generally positive for Mexican peso (MXN) because they lead to higher yields, which makes the country a more attractive place for investors. On the other hand, lower interest rates tend to weaken MXN. The key factor is the rate of differential rate with USD or, as is expected to set interest rates compared to the US Federal Reserve (Fed).
Banuxico meets eight times a year and its monetary policy is greatly influenced by the decisions of the US federal reserve system (Fed). Therefore, the Central Bank’s decision committee usually collects a week after the Fed. At the same time, Banxico responds and sometimes expects monetary policy measures determined by a federal reserve. For example, after the COVID-19 pandemic, before the Fed raised rates, Banxico first attempted to reduce the chances of essential depreciation of Mexican peso (MXN) and prevent papers that could distribute the country.
