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The Mexican Peso strengthens, supported by steady demand for risk assets. The Peso’s short-term trajectory will largely depend on Banxico’s next rate decision. USD/MXN slides as Dollar declines accelerate, with the pair vulnerable to deeper losses if bearish sentiment continues. The Mexican Peso (MXN) posts a second consecutive day of gains on Wednesday against the US Dollar (USD),  slipping below 19.40 ahead of key commentary from Federal Reserve (Fed) officials that could influence the monetary policy outlook. At the time of writing, USD/MXN is trading 0.33% lower at 19.36 as markets continue to digest Tuesday’s softer US CPI data, narrowing interest rate differentials, and resilient investor sentiment toward emerging markets.  The April US Consumer Price Index (CPI) report released Tuesday came in below expectations, signaling further easing in inflation and reinforcing market confidence in a potential rate cut by the Federal Reserve later this year. With the Fed keeping rates unchanged at its last meeting, markets continue to price in the first rate cut for September. However, upcoming commentary from central bank officials will be crucial in determining whether this timeline holds. On Wednesday, Vice Chair Philip Jefferson, a voting member, and San Francisco Fed President Mary Daly, a non-voting member, delivered remarks that offered limited reaction to the recent softer inflation data, reaffirming the Fed’s data-dependent approach. This sets the stage for Thursday, when Fed Chair Jerome Powell is expected to speak. His comments will be closely scrutinized for any shift in policy tone following the latest CPI report, with the US Dollar’s near-term direction particularly sensitive to any dovish or hawkish signals from this key appearance. Banxico is expected to cut rates on Thursday The Bank of Mexico (Banxico) will announce its latest interest rate decision on Thursday at 19:00 GMT, and analysts widely expect a third consecutive…

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Filed under: News - @ May 14, 2025 8:29 pm