Background on Moody’s Downgrade of US Credit Rating
On Friday, Moody’s unexpectedly downgraded the credit rating of the United States from Aaa to Aa1, citing concerns over the increasing public debt. Despite the White House’s rejection of this decision, stating that the world still trusts the US economy, market nervousness persists regarding a US already affected by its trade policies.
Impact on the Dollar and Mexican Peso
The Mexican peso appreciated against the dollar on Monday morning, as the US currency retreated following Moody’s surprise downgrade. Traders are also anticipating crucial local economic data releases.
- Spot exchange rate: The Mexican peso is currently trading at 19.4053 units per dollar, marking a 6.93-cent improvement (or 0.36%) compared to Friday’s official closing rate of 19.4746 pesos set by the Banco de México (Banxico).
- Dollar range: The dollar’s movement is within a range, with a high of 19.4924 units and a low of 19.4002 units.
- Dollar Index (DXY): The Intercontinental Exchange’s Dollar Index, which compares the dollar to a basket of six reference currencies, fell by 0.81% to 100.27 units.
Market Reaction and Local Focus
Although the White House stated that President Donald Trump disagreed with Moody’s decision and asserted that the world still trusts the US economy, market reactions have not eased.
“Investors are evaluating the implications of Moody’s credit rating downgrade for the US, considering growing public debt and Congress’ approval of President Donald Trump’s tax reform plan,” explained Monex in a statement.
Local Economic Data Anticipation
Traders’ attention is now on Mexico’s upcoming GDP and inflation figures, scheduled for release on Thursday. This comes a week after the central bank reduced its key interest rate by 50 basis points and warned of potential further adjustments.
Key Questions and Answers
- What caused the recent downgrade of the US credit rating by Moody’s? Moody’s downgraded the US credit rating from Aaa to Aa1 due to concerns over increasing public debt and the approval of President Donald Trump’s tax reform plan by Congress.
- How did the Mexican peso react to this news? The Mexican peso appreciated against the dollar, gaining 6.93 centavos (0.36%) compared to the previous day’s closing rate set by Banxico.
- What local economic data is currently under scrutiny? Traders are closely watching Mexico’s upcoming GDP and inflation figures, which will be released on Thursday.
- How has the White House responded to Moody’s downgrade? The White House stated that President Donald Trump disagrees with Moody’s decision and emphasized that the world still trusts the US economy.
