Background on the Mexican Peso and its Recent Performance
The Mexican peso has been on an upward trend against the US dollar for three consecutive trading sessions. This positive movement comes as market volatility subsides following a period of uncertainty caused by the conflict between Israel and Iran.
Market Performance Details
- The peso has appreciated by 24.39 centavos, or 1.29%, against the dollar since last Friday’s closing rate of 19.1683 units per dollar.
- On Wednesday, the exchange rate ended at 18.9244 units per dollar, up from 18.9930 units the previous day, according to official data from Banco de México (Banxico).
- The dollar’s price ranged from a high of 19.0300 units to a low of 18.8982 units.
- The Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to six reference currencies, fell by 0.24% to 97.74 points.
Jerome Powell’s Testimony and its Impact on the Market
The day’s trading was also marked by the semi-annual testimony of Federal Reserve President Jerome Powell before the US Congress. Powell stated that the Fed would need to manage the risk of persistent price pressures due to tariffs.
“Today, the market is digesting Jerome Powell’s message: no rush to cut interest rates and a warning about the inflationary impact of Trump’s tariffs,” said Jorge González, Director of Foreign Exchange and Risk Advisors.
“Technically, it has a bearish bias,” he added.
Expectations for the Banxico Announcement
In local news, traders are eagerly awaiting tomorrow’s monetary policy announcement by Banxico. Market expectations are high for a 50 basis points cut, which would be the third consecutive adjustment of this magnitude, bringing the reference interest rate down to 8%.
Market Reactions to Potential Banxico Decisions
Juan Carlos Cruz, a financial consultant, noted that operators will be watching Banxico’s decision closely. A smaller cut than anticipated could strengthen the peso due to a narrower spread compared to US interest rates.
Key Questions and Answers
- Q: What has been the recent performance of the Mexican peso against the US dollar?
- A: The Mexican peso has gained 24.39 centavos, or 1.29%, against the US dollar since last Friday’s closing rate.
- Q: What factors have contributed to the recent market volatility?
- A: Market volatility was caused by uncertainty surrounding the conflict between Israel and Iran.
- Q: How did Jerome Powell’s testimony affect the market?
- A: Powell’s message of no rush to cut interest rates and caution about inflationary impacts from tariffs influenced market behavior.
- Q: What is the expected decision from Banxico, and how might it impact the peso?
- A: Market expectations are for a 50 basis points cut, which could strengthen the peso if the cut is smaller than anticipated.
