Overview of the Mexican Peso’s Performance
The Mexican peso experienced a slight decline against the dollar on Thursday. This movement occurred in a market anticipating the speech by Jerome Powell, the president of the Federal Reserve, at the annual Jackson Hole symposium for central bankers. Meanwhile, locally, traders were examining the minutes released by Mexico’s central bank, Banco de México (Banxico).
Exchange Rate and Dollar Movement
The exchange rate concluded the session at 18.7668 units per dollar, compared to a previous day’s level of 18.7562 units. According to official Banxico data, this movement represented a loss of 1.06 centavos, or 0.06%, for the peso.
The dollar price fluctuated within a range from a high of 18.8126 units to a low of 18.7308 units. The Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to six benchmark currencies, increased by 0.41% to 98.65 units.
Market Expectations on Banxico’s Stance
Gabriela Siller, head of analysis at Banco Base, stated: “From the minutes, it is evident that three members of the Governing Board favor continuing with rate cuts, one expresses caution regarding goods inflation, and another supports maintaining the current stance.”
Earlier in August, the monetary authority slowed down the pace of adjustments with a 25-basis-point cut. According to the minutes, the governing board considered further adjustments despite some concerns about persistent inflation.
An encuesta by Citi, released on Wednesday, indicated that a significant portion of the market anticipates the authority will announce another 25-basis-point reduction in the reference rate at its upcoming decision on September 25.
US Interest Rate Outlook
Global markets await the words of Jerome Powell, the Federal Reserve chair, in Wyoming for the annual Jackson Hole symposium of central bankers. His remarks are expected to provide some signals about the future of US interest rates.
Minutes from the Federal Reserve’s recent policy meeting showed a slight increase in support for a rate cut within the Federal Open Market Committee (FOMC) to prevent further weakening of the labor market.
Today in the United States, new initial claims for state unemployment benefits rose by 11,000 to 235,000 last week, marking the largest increase since late May. The figure surpassed expectations of a lower 225,000.
Key Indicators on the Horizon
For now, the peso remains relatively stable while awaiting significant indicators. Tomorrow, the inflation data for the first half of the month and Mexico’s GDP growth figures for the second quarter will be crucial.
Earlier today, it was reported that Mexico’s retail sales unexpectedly fell 0.4% on a monthly basis last month, with declines across almost all states in the country. Annually, retail sales increased by 2.3%.
Key Questions and Answers
- Q: What caused the slight decline in the Mexican peso?
- Q: How are US interest rates expected to evolve?
- Q: What recent US economic data was released?
- Q: What key Mexican economic indicators are upcoming?
A: The peso’s slight decline occurred due to market anticipation of the Federal Reserve chair Jerome Powell’s speech in Jackson Hole, as well as the examination of Banco de México’s minutes.
A: Market participants anticipate another 25-basis-point reduction in the US reference rate, according to a Citi survey, as the Federal Reserve seeks to prevent further labor market weakening.
A: The new initial claims for state unemployment benefits increased by 11,000 to 235,000 last week, surpassing expectations of a lower figure.
A: Investors will closely watch the inflation data for the first half of the month and Mexico’s GDP growth figures for the second quarter.
