Daily digest market movers Mexican Peso advances on improved risk appetite

Last week, Bank of Mexico Governor Victoria Rodriguez Ceja said they’re ready to slash interest rates if inflation continues downward. This would exert downward pressure on the Peso, which has depreciated after former US President Donald Trump’s victory boosted the Greenback, as some of its policies are inflation prone.

Mexico’s Chamber of Deputies approved the dissolution of autonomous bodies, which, according to experts, puts Mexico at risk of being taken out of the USMCA free trade agreement.

Mexico’s mid-month inflation rate dived from 4.68% to 4.56%. Core inflation, seen as a better gauge of price trends because it strips out volatile energy and food prices, came below the forecast of 3.72% at 3.58% YoY.

Data from the Chicago Board of Trade, via the December fed funds rate futures contract, shows investors estimate 22 bps of Fed easing by the end of 2024.