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Mexican peso strengthens as softer US inflation lifts rate-cut odds

USD/MXN traded around 17.05, after July CPI came in at 3.4% year over year and core CPI eased to 2.5%.

Reported · Written up by our desk · Major Pairs

The Mexican peso rose against the US dollar, with USD/MXN moving to about 17.05, after US inflation data came in softer than expected and reduced market expectations for a Federal Reserve rate hike at its next meeting, FXStreet reported. US July CPI matched estimates and the disinflation trend continued, with headline CPI dipping from 3.5% to 3.4% year over year and core CPI easing from 2.6% to 2.5% over the 12 months to July, the outlet said. The data was viewed as benign, coming after oil rose sharply in July. FXStreet also noted that while some Fed-dovish expectations improved, they were not fully secure. It pointed to commentary from Boston Fed president Susan Collins, who said that if inflation stays elevated she would vote to raise rates, and it referenced additional Middle East ceasefire and Strait of Hormuz remarks that could add uncertainty. In FX trading, the US dollar index was up modestly, while Citi Mexico survey results showed analysts expecting Banxico to keep its policy rate at 6.50% through the end of the year. The median forecast also pointed to USD/MXN ending 2024 around 17.90, alongside technical signals including USD/MXN trading below key moving averages and an RSI near oversold levels, FXStreet said.

Latest closeDollar index 99.99 ▲0.2%

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