Mexican Peso drops on Fed’s Bowman hawkish remarks
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Mexican Peso depreciates sharply with USD/MXN trading back above 18.00, gaining over 1%. Fed Governor Michelle Bowman’s comments on holding policy rates steady and willingness to raise rates pressure the Peso. Upcoming Banxico monetary policy decision on Thursday, with most economists expecting rates to remain unchanged at 11.00%. The Mexican Peso depreciated sharply against the US dollar as Federal Reserve (Fed) Governor Michelle Bowman was hawkish compared to San Francisco Fed President Mary Daly, who was concerned about the labor market, stressing that the dual mandate risks are balanced. Nevertheless, the USD/MXN trades at 18.15, gaining more than 1%. The Peso was stressed after Bowman emphasized that the policy rate would be held steady “for some time,” adding that there has been “modest further progress on US inflation” and that she’s willing to raise rates if inflation stalls. San Francisco Fed President Mary Daly stressed that the Fed must “exhibit care” as it aims to finish the job of bringing down inflation, adding that it “is not the only risk we face.” Mexico’s economic docket featured June’s mid-month inflation data on Monday, ahead of the Bank of Mexico (Banxico) monetary policy decision on Thursday. The Citibanamex survey showed that most economists expect rates to be unchanged at 11.00%, yet they expect the central bank to cut rates until August. Daily digest market movers: Mexican Peso tumbles despite high inflation warranting Banxico’s rate holding Mexico’s June mid-month consumer prices rose above estimates, which would likely deter Banxico from easing policy, on June 27. Headline inflation jumped from 4.70% expected to 4.78% YoY, though core prices edged lower from 4.31% to 4.17% YoY. Citibanamex survey showed economists priced out fewer rate cuts by the central bank, estimating rates will be lowered to 10.25% in 2024, up from 10.00%. Regarding the USD/MXN, the…
Filed under: News - @ June 26, 2024 12:24 am