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Mexican Peso strengthens as November inflation decreases, suggesting potential for continued rate cuts. Banxico Governor adopts cautious stance on aggressive rate cuts despite lower inflation. Upcoming economic releases include Mexican Consumer Confidence and US CPI with markets watching for further cues on monetary policy. The Mexican Peso extended its rally for the fifth consecutive day as inflation in Mexico dipped to its lowest level since April 2024. Even though this suggests the Bank of Mexico (Banxico) might continue its easing cycle, the USD/MXN dropped 0.06% and traded at 20.14 at the time of writing. Mexico’s economic docket revealed that headline and core inflation in November missed estimates, edging lower after the Consumer Price Index (CPI) hit its highest level of 5.57% in July, according to the Instituto Nacional de Estadistica Geografia e Informatica (INEGI). Last week, Banxico Governor Irene Espinosa was hawkish, saying, “At this point, too many things need to change to be able to believe that the conditions are right for a much more aggressive move.” Her statement followed a query about the possibility of a cut of more than 25 points. Across the border on Friday, the latest US Nonfarm Payrolls (NFP) report in November was stellar. The economy added 227K jobs to the workforce, exceeding estimates of 200K, though the Unemployment Rate ticked up from 4.1% to 4.2%. Federal Reserve (Fed) officials have begun their blackout period before the December 17-18 monetary policy meeting. Policymakers failed to provide any hints regarding the meeting with most supporting a gradual approach. They are awaiting November’s Consumer Price Index (CPI) data on December 11. This week, Mexico’s economic docket will feature Consumer Confidence and Industrial Production data. In the US, the Consumer Price Index, the Producer Price Index, and Initial Jobless Claims data will also entice traders. Daily digest…

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Filed under: News - @ December 9, 2024 6:28 pm