USDMXN - Banxico Rate Decision Looms
Solid ECN—The Mexican peso has shown remarkable resilience. It is trading at approximately 16.8 per USD, a significant recovery from its five-month low of 17.2 recorded on April 25th. This improvement is largely due to a weakened U.S. dollar, spurred by increasing indications that the Federal Reserve might implement two rate cuts later this year.
Contributing factors include moderated job growth and a rise in the U.S. unemployment rate in April, alongside Federal Reserve Chair Powell’s recent dismissal of potential rate hikes.
Economic Indicators and Policy Outlook
Amidst these currency shifts, Mexico’s central bank, Banxico, is expected to maintain its interest rate at 11% on May 9th, holding steady after a reduction in March. However, emerging economic data could spark discussions among Banxico’s Governing Council members about possible policy changes.
The Mexican economy showed signs of acceleration, expanding by 0.2% in the first quarter of 2024, outpacing the previous quarter’s growth and surpassing market expectations. Additionally, business confidence in Mexico is robust, remaining near an 11-year high, although inflation exceeds 4%.