Background on the Mexican Peso and its Recent Fluctuations
The Mexican peso appreciated against the US dollar in mid-week trading, rebounding from a streak of three consecutive days of losses. This occurred as the market absorbed producer price data from the United States, which remained unchanged in June.
Market Performance and Data Analysis
The exchange rate ended the day at 18.7274 units, marking a gain of 9.14 centavos (0.49%) compared to the previous day’s 18.8188 units, according to official data from Mexico’s central bank, Banco de México (Banxico).
The US dollar fluctuated between a high of 18.8484 units and a low of 18.6833 units. The Intercontinental Exchange’s Dollar Index (DXY) fell 0.35% to 98.29 points, comparing the US currency with six reference currencies.
Influence of US Producer Price Index and Federal Reserve
Monex Grupo Financiero stated, “Today, the Mexican peso is favored by a slight technical correction following the previous session’s weakness, as well as an upward external impulse after evaluating the US producer inflation report.”
The US Producer Price Index (PPI) remained unchanged in June compared to the previous month, surpassing analysts’ consensus forecast of a 0.2% monthly growth. This followed a 0.3% increase in May.
Although the Federal Reserve has signaled a potential interest rate cut this year, as per their latest meeting minutes, the rise in consumer price data released yesterday maintained expectations of rate stability until at least September.
Market Volatility and Donald Trump Speculation
The session experienced volatility following rumors that US President Donald Trump might soon dismiss Federal Reserve Chair Jerome Powell, which were later denied.
Expert Opinions on Peso’s Recovery
Grupo Financiero Banorte expressed optimism, stating, “We believe the peso’s recovery will continue.” Banco Base added in a note, “From a technical perspective, the peso has been consolidating below the psychological level of 19 units per dollar.”
Key Questions and Answers
- What caused the Mexican peso to appreciate against the US dollar? The peso gained strength after three consecutive days of losses, influenced by a slight technical correction and an upward external impulse following the evaluation of the US producer inflation report.
- How did the US Producer Price Index impact the Mexican peso? The unchanged PPI in June surpassed analysts’ expectations of a 0.2% monthly growth, contributing to the peso’s recovery.
- What are the implications of recent US consumer price data on interest rates? Despite the Federal Reserve’s openness to potential rate cuts, the rise in consumer price data maintained expectations of rate stability until at least September.
- How did speculation about Donald Trump and Jerome Powell affect the market? Although rumors of Trump dismissing Powell caused initial volatility, these were later denied without significant market impact.
