Mexican Peso extends losses, pressured by inflation still above Banxico's 2-4% goal despite recent declines.
Economic data shows deceleration in Mexico’s GDP, hinting at potential for further rate adjustments by Banxico.
US Dollar strengthens amid strong labor market data and Fed officials signaling potential rate cuts in September.
The Mexican Peso prolonged its agony and extended its losses to four straight days against the Greenback after data showed that inflation is coming down; but it remains above the Bank of Mexico’s (Banxico) 2 to 4% goal. The US Dollar appreciates against most currencies amid mixed economic data, yet the USD/MXN trades at 19.42 and gains 0.81%.
The USD/MXN bounced off daily lows of 19.24 as the Instituto Nacional de Estadistica Geografia e Informatica (INEGI) revealed that August’s mid-month headline and core inflation dropped. This could warrant another Banxico adjustment to its main reference rate following the August 8 meeting.
Other data showed the economy is decelerating. The Gross Domestic Product (GDP) for the second quarter of 2024 ticked lower on an annual basis yet remains above the 2% threshold.
Across the border, the US economic docket revealed that the labor market remains strong despite cooling. While S&P Global PMIs were mixed, they showed that the economy in the services sector remains strong.
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