Mexico City. Now the unknown factor is Mexico’s economic policy, a cut to the reference rate of a quarter or half a percentage point, which the Bank of Mexico will clear up next Thursday. Meanwhile, the Mexican peso operated with indecision this Monday.
The Mexican currency registered a marginal daily depreciation of 0.01 percent, closing at 19.4104 pesos per spot dollar. According to data from the Bank of Mexico (BdeM), the exchange rate operated between a maximum of 19.4800 units and a minimum of 19.3340 units.
Following the broad rate cut by the US Federal Reserve (Fed) last week, as well as the monetary surprise in China and awaiting the decision of the Bank of Mexico this week, the national currency showed little change.
“With the hangover from the Fed’s decision and assimilating the latest comments from the members of the Federal Open Market Committee (FOMC), the markets are assimilating the rate cut and liquidity injection from the People’s Bank of China. Meanwhile, Mexico’s economy grew more than expected in July,” described the analysis area of CIBanco.
Meanwhile, next Thursday, the market consensus expects the Bank of Mexico to cut the reference rate by 0.25 percentage points, to 10.50 percent. However, the behavior of Mexican bonds is suggesting that the cut could be 0.50 percentage points, hence economic agents are cautious awaiting the final decision.
And just last week, the Federal Reserve surprised us by cutting its rate by half a percentage point, so surprises now seem to be expected.
The People’s Bank of China surprised by lowering one of its short-term policy rates without warning. It also injected a significant amount of liquidity into the system, confirming the institution’s intention to take measures to boost the country’s economic growth.
The dollar index, which measures the performance of the US currency against a basket of six international currencies, appreciated 0.23 percent, to 100.650 units.
In favor of cuts
The above, in the midst of statements Minneapolis Fed President Neel Kashkari said he expects two additional 0.25 percentage point cuts before the end of the year. Chicago Fed President Austan Goolsbee said interest rates need to come down significantly to protect the labor market, which could mean “many more rate cuts over the next year.” Atlanta Fed President Raphael Bostic said substantial progress has been made in lowering inflation, but the labor market is weakening.
Following comments from Federal Reserve officials in favor of interest rate cuts, the Dow Jones registered a gain of 0.15 percent, linking three sessions on the rise and reaching a new historical high of 42,124.65 points. The Nasdaq showed an advance of 0.14 percent, to 17,973.60 units, and the S&P 500 gained 0.28 percent in the session, to 5,718.57 units. Within the sector, the gains of the following sectors stand out: energy, with a gain of 1.31 percent; discretionary consumption, 1.30 percent; real estate (1.13 percent) and basic services (0.97 percent).
For its part, the Price and Quotation Index (IPC) of the Mexican Stock Exchange (BMV) closed the session with a gain of 0.44 percent, equivalent to 231.76 points, to close at 52,422.24 units.
Brent crude futures for November fell 0.8 percent to $73.90 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for November fell 0.9 percent to $70.37 as disappointing euro zone business activity added to concerns about weak demand.
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– 2024-09-24 07:22:42
