Overview of the Mexican Peso Performance
The Mexican peso concluded the Tuesday trading session with minimal fluctuations against the US dollar. After fluctuating between losses and gains throughout the day, the local currency remained stable as markets processed comments from Jerome Powell, the President of the Federal Reserve.
The exchange rate ended this session at the level of 18.3428 units, compared to a record of 18.3526 units the previous day, according to official data from Banco de México (Banxico). This movement represented a 0.05% appreciation, close to a cent, for the currency.
The dollar price moved within a range between a high of 18.3869 units and a low of 18.3016 units. The Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to six reference currencies, fell 0.06% to 97.25 units.
Jerome Powell’s Comments
During a meeting at the Greater Providence Chamber of Commerce, Powell mentioned that the Fed needs to balance the risks posed by high inflation and weakening labor market conditions in upcoming monetary policy decisions.
Powell also stated that after the recent 25 basis points cut to the reference rate, the Fed is well-positioned for upcoming meetings. His comments aligned with the language used by the authority following last Wednesday’s move.
“The peso benefited from the weakening dollar, considering Powell’s cautious comments on monetary policy loosening,” said Monex Grupo Financiero. “Looking ahead, we expect the peso to trade within a range of 18.28 to 18.38.”
According to the FedWatch tool from CME, market participants currently assess around 90% probability of a rate cut in October, down from 92% the previous day. Participants are preparing for a crucial inflation data release later in the week that will be significant for the Fed.
Local Figures Assimilation
On the local front, retail sales data was released in the morning, showing a slight increase (0.1%) in July compared to the previous month. However, operators revised the IGAE activity economic data for the same month, which contracted more than anticipated.
Key Questions and Answers
- What is the current state of the Mexican peso against the US dollar?
The Mexican peso ended the day with minimal changes against the US dollar, trading at 18.3428 units according to Banco de México. - What did Jerome Powell comment on regarding the Federal Reserve’s monetary policy?
Powell emphasized the need to balance high inflation risks and weakening labor market conditions in upcoming policy decisions. - How did Powell’s comments affect the Mexican peso?
Powell’s cautious stance on monetary policy loosening led to a weakening dollar, which in turn favored the Mexican peso. - What are the current expectations for a potential rate cut by the Federal Reserve?
Market participants currently assess around 90% probability of a rate cut in October, according to the FedWatch tool from CME. - What recent local economic data was released, and how did it perform?
Retail sales increased slightly by 0.1% in July, while the IGAE activity economic data contracted more than expected for the same month.
