USD/MXN: Mexican peso rises to the highest in a week
The Mexican peso rose across the board on Friday and gained 1% versus the US dollar. The move takes place the day after the Bank of Mexico left interest rate unchanged at 7%, as expected.
“Banco de Mexico has likely ended its tightening cycle. After hiking at seven straight meetings, rates were kept steady for the first time since last August. The statement strikes us as being on the dovish side, saying that inflation has likely peaked and will turn lower in H2. It added that the current policy rate is consistent with moving inflation back to the 3% target”, said analysts from Brown Brothers Harriman. Inflation data showed on Wednesday, that the annual CPI rate in July rose to 6.44%, the highest level since December 2008.
Latin American currencies rose on Friday versus the US dollar. The greenback weakened after a lower-than-expected US CPI reading. The Mexican peso outperformed.
USD/MXN dropped sharply on Friday, erasing weekly gains. On Wednesday the pair reached at 18.05, the highest level in four weeks. Today it approached that area before turning to the downside.
During the American session accelerated the decline and bottomed at 17.75, the lowest since August 1. It was about to end the week at 17.83, practically unchanged from the level it had a week ago. Today’s slide pushed the price below a short-term uptrend line signaling that the bullish correction from 1-year lows is likely over.