- The USD/MXN falls below the 50-day SMA at 20.42, trading at 20.27.
- Weak American retail sales and soft PPI subdivision fuel reduces easy expectations.
- Mexico’s retail sales, Bannico minutes and Q4 GDP are in focus this week.
Mexican Peso (MXN) enhanced its profit vs. USD Dollar (USD), cleaned significant support on the 50-day simple moving average (SMA) of 20.42, as USD/MXN received approval at low exchange rates. At the time of writing, the foreign pair trades at 20.27, 0.09%below.
Last week’s worse-to-the United States (US) retail sales report reduced the USD/MXN pair amid uncertainty about economic growth in the US.
Although American consumer inflation figures have increased, some sub-stores of the manufacturer price index (PPI) were used to calculate the Federal Reserve (Fed) preferred inflation gauge, the main individual consumption expenditure (PCE) Price Index, The prices can aim to low, the possibility is increasing for the ease of the fed.
Following Friday data, data from the Chicago Board of Trade (COBOT) show that investors had given the price of 43 base points (BPS) easily.
Despite this, Philadelphia Fed Chairman Patrick Harkar said that the current status of the economy justifies the maintaining a stable rate policy, given that monetary policy is now well deployed. He admitted that inflation has been elevated and frequent in recent months, emphasizing that Fed’s policy stance should continue to work towards reducing inflation.
Prior to this week, retail sales for December at Economic Dock, Mexico, the latest meeting of Banco D Mexico (Bancico) will be released for minutes and GDP (GDP) figures Q4 2024.
Daily digest market mover
- Monetary policy deviations between Banxo and Fed reverse the USD/MXN, as the Fed will probably hold rates for a long period, while in the next meeting, Bansco is expected to cut the rate of 50 basis points again in the next meeting .
- The US dollar index (DXY), which tracks the performance of a deer against a basket of currencies, is unchanged at around 106.77, a headwind for USD/MXN.
- Trade disputes between the US and Mexico remain in the boiler room. Although countries first got common land, USD/MXN traders should know that there is a 30-day stop and tension may arise in late February.
UsD/MXN Technical Outlook: Mexican falls below 50-day SMA as Peso USD/MXN
The USD/MXN closes at 20.24 in low trends and 100-day SMAs on Monday, which if cleaned, can open the door for further negative side. The relative power index (RSI) replaced the recession, indicating that the foreign pair could be led to a 20.00 psychological figure.
In that result, if the sellers push the prices below 20.00, the next support will be lower at 19.64 at 19.64, followed by the 200-day SMA at 19.37.
In contrast, if the USD/MXN rises above the 50-day SMA, the next resistance would be 20.50, followed by the January 17, 21.00 of 20.90, and the year-by-year (YTD) of 21.29.
Banskozo fix
Bank of Mexico, also known as Bannico, is the central bank of the country. Its mission is to preserve the value of Mexico’s currency, Mexican Peso (MXN), and determine monetary policy. To end this, its main objective is to maintain low and stable inflation within the target levels – close to its target of 3%or, between 2%and 4%, the middle point in a tolerance band.
The main tool of Bannico to guide the monetary policy is by determining interest rates. When inflation is above the target, the bank will try to increase the rates to control it, making it more expensive to borrow money for homes and businesses and thus cool the economy. High interest rates for Mexican peso (MXN) are usually positive because they cause high yields, making the country a more attractive place for investors. Conversely, the low interest rate weakens MXN. The rate difference with USD, or how Bannico is expected to determine interest rates compared to the American Federal Reserve (Fed), is an important factor.
Banxico is found eight times a year, and its monetary policy is greatly affected by the decisions of the American Federal Reserve (FED). Therefore, the Central Bank’s decision -making committee usually assembles a week after the Fed. In doing so, Bannico reacts and sometimes estimates monetary policy measures prescribed by the Federal Reserve. For example, after the Kovid -19 epidemic, before the Fed rates, Bannico first did it first to reduce the possibility of adequate depreciation of Mexican Peso (MXN) and prevent capital outflows that destroy the country.
