The Mexican peso reached its best day in 17 days on Thursday. The Mexican currency found a boost in the weakness of the dollar, after the latest macroeconomic data in the United States indicate that the Federal Reserve (Fed) will begin to reduce the cost of credit next week.
The Mexican peso registered a gain of 1.62 percent, equivalent to 32.11 cents, to close at 19.4724 units per dollar spotits best level since August 26.
Amid confirmation that the European Central Bank (ECB) cut its interest rates by a quarter of a percentage point to 3.5 percent, the lowest level since June 2023, and that producer inflation in the United States was above expectations but remains consistent in its decline, the national currency started slightly lower against the dollar. In Mexico, judicial reform has been approved in at least 18 local congresses.
According to data from the Bank of Mexico, the exchange rate operated between a maximum of 19.6800 units and a minimum of 19.4660. Thus, the peso was the second most appreciated currency among the main crosses against the US currency, only surpassed by the Russian ruble, according to Base statistics.
The national currency has accumulated a depreciation of 14 percent so far this year, the third worst performing currency among the basket of emerging countries.
Support at 19.5: analysts
The dollar weakened against its major counterparts and emerging market currencies as U.S. producer price index readings for August were revised lower, even though September readings came in higher than expected. With U.S. inflation on the decline, markets have virtually priced in an interest rate cut of at least 0.25 percentage points and that put pressure on the greenback.
described Alexander Londoño, analyst at ActivTrades, broker of multiple financial assets.
The exchange rate has retreated from a peak of 20.13 and approached 19.5 pesos per dollar, where it could find support. Despite the decline, the medium-term upward trend is still maintained
predicts Londoño.
The dollar remained weak worldwide, according to its weighted index, which measures the performance of the US currency against a basket of six international currencies, falling 0.42 percent to 101.230 units.
Meanwhile, the Mexican Stock Exchange (BMV) achieved its best gain since July 10, rising 1.57 percent on Thursday, equivalent to an advance of 803.97 units, to close at 51,999.73 points.
The boost came from gains in the share price of Inbursa, 3.80 percent; Traxión, 3.73; Banorte, 3.62; Bajío, 3.25; América Móvil, 1.50; Asur, 2.26, and Bimbo, 2.40 percent, among others.
Earnings from rates
The Bureau of Labor Statistics (BLS) released its producer price inflation (PPI) figures, which showed a monthly variation of 0.2 percent in August, slightly above the market consensus of 0.1 percent and the previous month of zero percent.
Thus, in its annual variation, PPI inflation stood at 1.7 percent (previously it was 2.1 percent) and the underlying PPI at 3.3 percent, slightly above the previous 3.2 percent.
U.S. producer prices rose more than expected in August amid higher service costs, but the trend remained consistent with declining inflation
explained Intercam analysts.
US producer inflation, which is expected to be the last reading by the Federal Reserve before its monetary policy meeting next week, almost guarantees the start of a less restrictive policy.
Initial claims for unemployment insurance in the United States for the week ending September 7 stood at 230,000, which was an increase of 2,000 from the previous week of 228,000.
Risk appetite could be partly supported by the expectation that the Fed will begin to reduce the federal funds rate on September 18. The S&P 500 index rose 0.75 percent to 5,595.76 points; the Dow Jones index rose 0.58 percent to 41,967 points; and the Nasdaq index gained 1.02 percent to 17,572.43 points.
Brent crude rose 1.97 percent to $71.97 a barrel, while West Texas Intermediate (WTI) light crude gained 2.47 percent to $68.97 a barrel.
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– 2024-09-20 02:40:56
