- Mexican profits with peso, when China reverses from 125% of tariffs by sending an American dollar index below 100 for the first time from 2021.
- Banxico minutes show unanimous concern with growth release; Reduction of the rate probably at the next meeting.
- Mixed American data: PPI cools, but remains increased; Sentiment and inflation expectations jump.
The Mexican peso ends a week with a higher hint when the green rain weakens. The trade war in China and the USA increased, and China has reversed against the latest announcement of the tariffs of the US President Trump. USD/MXN trades at 20.27, which is a decrease of 0.72%.
The narrative of financial markets remains around the tariffs. China’s response to the USA 145% was known at the beginning of the session in North America, and Beijing used 125% of duties on US products. After the Buck header, it fell sharply, as the American dollar index revealed, which tracks its performance in relation to the basket of six other currencies. DXY reached over 30 months of the lowest level of 99.01. At the time of writing, the DXY is 99.87, which is a decrease by over 1%.
Mexican industrial production improved in February, revealed the Instituto Nacional de Estadística Geografía E Informática (Inegi). Meanwhile, the last minutes of the Banco de Mexico (Banxico) meeting have revealed that all its members said that the economy was releasing and the disinfection process has evolved.
As for tariffs, Mexican products outside the USMCA trade agreement remain subject to 25% of their duties, despite the 90-day break in other countries, they revealed the White House official.
Data from the United States (USA) revealed that the manufacturer’s price indicator (PPI) was immersed in comparison with February data. The ppi core also cooled, but remained above the 3%threshold.
Other data showed that consumer moods have deteriorated rapidly and inflation expectations increased.
Although USD/MXN is falling, there is a further advantage. Banxico is expected to lower the rates at the upcoming meeting. Unlike this, the Fed would probably keep the rates unchanged at the May meeting, and investors see the first cut in July.
Daily Digest Market Movers: Mexican peso dissatisfied with high profitability in the USA, risk aversion
Inegi revealed that Mexico’s industrial production in February increased by 2.5% of mother, compared to the spasm -0.6% in January. Within twelve months to February, production improved from -2.9% to -1.3% R.
Banxico Governor Victoria Rodriguez Ceja appeared before the Senate. She said that the government council is still dissatisfied with the inflation rate, which amounted to 3.8% y / rw March, although far from 3% of the goal. She added that the process of disinflation and economic slowdown justify the Banxico approach and suggested that the central bank may continue to alleviate politics.
In April, consumer moods in the US fell rapidly, and the University of Michigan’s index fell from 57.0 to 50.8. Inflation expectations increased, and annual perspectives increased from 5% to 6.7%, and 5 years from 4.1% to 4.4%.
PPI from March, the US has decreased to 2.7% y / y, below 3.3% of the forecast and compared to 3.2%, which signals more pliable costs of the amount.
Core PPI maintained a sturdy level of 3.3%y / y, compared to 3.5%, but still above the threshold of 3%.
USD/MXN Technical perspectives: Mexican peso is appreciated, like USD/MXN falls below 20.50
Uptrend USD/MXN growth remains in the game, although sellers appeared, dragging the price below 20.50. At the end of the session, the bears fueled the exchange rate below the 50-day and 100-day straight movable (SMA) (SMA) in the vicinity of 20.33/36, which, if exceeded, removes the floor to test 20.00.
And vice versa, if USD/MXN climbs on April 9 Daily Peak with 21.07, the couple may be ready to challenge the annual (YTD) highest 21.28.
Mexican PESO questions
The Mexican peso (MXN) is the most traded currency among its peers from Latin America. Its value depends widely by the results of the Mexican economy, the policy of the Central Bank of the Country, the amount of foreign investment in this country, and even levels of monetary messages sent by Mexicans living abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the newcombating process – or the decision of some companies to transfer production capacity and supply chains closer to their family countries – is also seen as a catalyst of the Mexican currency, because the country is considered a key production hub on the American continent. Oil prices are the next MXN catalyst, because Mexico is a key exporter of the goods.
The main goal of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in order or 3%similar to the purpose, the middle point in tolerance bands from 2%to 4%). For this purpose, the bank sets an appropriate level of interest rates. When the inflation is too high, Banxico will try to tame it by collecting interest rates, which makes it more steep for households and companies to borrow money, and thus cooling demand and general economy. Higher interest rates are generally positive for the Mexican peso (MXN), because they lead to higher crops, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
The release of macroeconomic data is crucial for the assessment of the state of the economy and may affect the Mexican valuation (MXN). A sturdy Mexican economy, based on high economic growth, low unemployment and high trust, is good for MXN. It not only attracts more foreign investment, but can encourage Bank Mexico (Banxico) to raise interest rates, especially if this force connects with increased inflation. However, if economic data is delicate, MXN probably absorbs.
As a currency on the emerging market, Mexican peso (MXN) strives to strive during risk periods or when investors see that wider market risk is low, and therefore willingly engage in investments that have more risk. And vice versa, MXN tends to weaken during market turbulence or economic uncertainty, because investors usually sell assets with a higher risk and resort to more stable unthreatening time.
