This week, investors received data on inflation and employment that showed signs of persistent pressure on prices and strength in the United States economy, affecting expectations for rate cuts this year.
The Mexican peso falls sharply this Friday morning. The local currency retreats in the face of a strengthening dollar, which gains momentum from growing expectations that the Federal Reserve (Fed) could extend its restrictive monetary policy.
The spot exchange rate is located at the level of 16.7060 units per dollar. Compared to a close of 16.4360 units yesterday, with data from the Bank of Mexico (Banxico), the movement means 27 cents less, a depreciation of 1.64 percent.
The dollar price moves in an open range between a maximum of 16.7270 pesos and a minimum of 16.4263 units. The Dollar Index (DXY), from the Intercontinental Exchange, which measures the greenback against six strong currencies, rises 0.78% to 106.10 points.
Investors received data this week on inflation and employment that showed signs of persistence in price pressure and strength in the United States economy, affecting expectations for rate cuts this year.
“The market is getting used to the idea that the Fed will not be able to start lowering interest rates in June, as had been discounted, and that it will possibly do so less than three times this year,” explained CIBanco in an analysis note.
For now, investors’ attention is focused on speeches that will be given by several officials of the US central bank, including Raphael Bostic, president of the Atlanta Fed, and Mary Daly, president of the San Francisco Fed.
From a technical standpoint, the peso continues with the corrective movement that occurred after reaching its best level in almost nine years in the middle of the week, just above 16.25 units. This could pave the way towards 17 pesos.
“Very short-term indicators are pointing upwards and indicate further depreciation. If the pair finally exceeds 16.7, it would rise to the next ceiling, between 16.90 and 17 pesos per dollar,” explained Georgina Muñiz, Technical Analyst at Vector.
Source: El Economista
