Daily digest market movers: Mexican Peso boosted by broad US Dollar weakness
- Mexico’s Business Confidence in February was 54.3, down from 54.4, the National Statistics Agency (INEGI) revealed.
- Mexico’s S&P Global February Manufacturing PMI rises to 52.3 from 50.0 in January.
- Banxico’s February private analysts poll projections for 2024:
- General inflation is foreseen at 4.10%, while underlying is expected at 4.06%.
- The economy is expected to grow 2.40%, unchanged from January.
- The USD/MXN exchange rate would end the year at 18.31, down from 18.50.
- Interest rates are expected to be lowered from 11.25% to 9.50%.
- During Banxico’s quarterly report, policymakers acknowledged the progress on inflation and urged caution against premature interest rate cuts. Governor Victoria Rodriguez Ceja said adjustments would be gradual, while Deputy Governors Galia Borja and Jonathan Heath called for prudence. The latter specifically warned against the risks of an early rate cut.
- Banxico updated its economic growth projections for 2024 from 3.0% to 2.8% YoY and maintained 1.5% for 2025.
- Mexico’s economy is expected to slow down due to higher interest rates set by Banxico at 11.25%. That’s the main reason that sparked a shift in three of the five governors of the Mexican Central Bank, who are eyeing the first rate cut at the March 21 meeting.
- The latest inflation report in Mexico showed that headline and underlying inflation continued to dip toward Banxico’s goal of 3%, plus or minus 1%, while economic growth exceeded estimates but finished below Q3’s 3.3%.
- Mexico’s economic data released during the week thus far:
- The Unemployment Rate rose from 2.6% to 2.9% YoY in January, exceeding estimates of 2.8%.
- The Balance of Trade for January revealed the country posted a trade deficit of $302 million.
- Mexico’s Consumer Price Index (CPI) in the first half of February was 4.45%, down from 4.9% YoY.
- Mexico’s Core CPI slowed from 4.78% to 4.63% on an annual basis.
- Mexico’s GDP for Q4 2023 exceeded estimates of 2.4% YoY and hit 2.5%, less than Q3 2023 print of 3.3%.
- Economic trade issues between Mexico and the US could depreciate the Mexican currency if the Mexican government fails to resolve its steel and aluminum dispute with the United States. US Trade Representative Katherine Tai warned the US could reimpose tariffs on the commodities.
- S&P Global revealed that manufacturing activity in February in the United States *US( expanded sharply, with the PMI edging up from 50.7 to 52.2. Later, the Institute for Supply Management (ISM) reported that February Manufacturing PMI came at 47.8, below estimates of 49.5 and January’s 49.1
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