Background on Key Figures and Institutions
The Mexican peso strengthened against the US dollar on Thursday’s trading session. This development occurred in a market that absorbed local inflation figures below expectations and anticipated the release of a US price report, scheduled for the following day.
The Bank of Mexico (Banxico) reported that the exchange rate ended the day at 18.3952 units per dollar. Compared to the previous day’s rate of 18.4479 units, this represented a gain of 5.27 centavos, equivalent to 0.29 percent.
The dollar’s movement was confined between a high of 18.4537 units and a low of 18.3822 units. Meanwhile, the Dollar Index (DXY) from the Intercontinental Exchange, which compares the US currency to six benchmark currencies, increased by 0.05 percent to 98.96 units.
US Inflation Data and Federal Reserve Focus
Despite the Federal Reserve‘s shift in focus from inflation to the labor market’s health, the upcoming consumer price index (CPI) data in the US will still be closely monitored. These figures will serve as a crucial reference leading up to the next monetary policy meeting, given the ongoing government shutdown.
Local Inflation Data and Banxico Expectations
Meanwhile, local traders processed Mexico’s first-half October inflation data. The figures revealed a more significant slowdown than anticipated, reinforcing expectations that the monetary authority will continue reducing interest rates.
The general consumer price index slowed to 3.63 percent in the first half of October, while the underlying component, excluding volatile food and energy prices, dropped to 4.24 percent—its lowest level since mid-August.
Expert Analysis
“The October half-month CPI was lower than expected. This leaves room for Banxico to extend its gradual flexibility cycle following last month’s 25 basis point reduction,” said Felipe Barragán, Pepperstone’s research strategist.
Key Questions and Answers
- What is the main topic of this article? The Mexican peso’s appreciation against the US dollar following better-than-expected local inflation data.
- Who are the key figures or institutions mentioned? The Bank of Mexico (Banxico), the Federal Reserve, and Pepperstone’s research strategist Felipe Barragán.
- What are the local inflation figures and their significance? The consumer price index slowed to 3.63 percent, and the underlying component dropped to 4.24 percent in the first half of October, indicating a more significant slowdown than expected.
- Why are US inflation data and the Federal Reserve’s focus on labor market health important? These figures will be closely monitored as a crucial reference leading up to the next monetary policy meeting, given the ongoing government shutdown.
- How does Felipe Barragán’s analysis support the article’s main idea? Barragán’s view that the lower-than-expected CPI leaves room for Banxico to extend its gradual interest rate reduction cycle supports the article’s main idea of the peso’s appreciation.
