Title: Mexican Peso Slightly Depreciates Against US Dollar as Markets Await US Currency Data
Subtitle: Speculation Rises on End of Fed’s Interest Rate Hike Cycle
Date: [current date]
Investing.com – The Mexican peso started trading on Tuesday, July 18, with a slight depreciation against the US dollar as markets eagerly await US currency data, which will provide more insights into the direction of the strengthening economy. Signs indicate that the end of the Federal Reserve’s interest rate hike cycle is drawing near.
At 05:10 in the morning (Central Mexico time), the Mexican peso was valued at 16.74 per dollar, representing a depreciation of 0.14%. These levels are similar to those of the previous day, where the peso reached highs of 16.89 and lows of 16.70 pesos per dollar.
This week, the key economic indicators to watch out for are the United States‘ industrial production and retail sales data. Additionally, investors will focus on the quarterly reports of significant companies such as Tesla, which is scheduled to release its results on Wednesday, July 19. In Mexico, the retail sales data for May will also be made public.
The expectations regarding the monetary policy of the United States will heavily influence the behavior of the Mexican peso. Market participants widely anticipate that in the decision on July 26, the Federal Reserve will raise interest rates by another quarter of a point, indicating that they will remain unchanged for an indefinite period. Consequently, this would mark the end of the bullish cycle.
Jorge Gordillo Arias, the director of Economic and Financial Analysis at CiBanco, stated, “The US consumer inflation report was very well received by the financial market, as speculation increased that the end of monetary tightening is near.” He further added that inflation in the US appears to be moving in the desired direction as estimated by monetary authorities. The data confirms a significant reduction in both readings, with the underlying one highlighted.
Gordillo explained, “This encourages markets as the fight against inflation seems to be gaining ground, which would put less pressure on the Fed to continue contracting the economy through additional hikes. The soft landing of the US economy is starting to make more sense again and the markets could start to price in such a scenario.”
In conclusion, while the Mexican peso experienced a slight depreciation against the US dollar, anticipation is growing regarding the forthcoming US currency data. This data will shed more light on the strengthening US economy and its impact on the Federal Reserve’s interest rate hike cycle.