The Mexican Peso erased some of its earlier gains against the US Dollar on Tuesday, snapping four days of consecutive gains. This price action was sponsored by hawkish comments made by Minneapolis Fed President Neel Kashkari. Additionally, traders bracing for the release of Mexico’s inflation report and the Bank of Mexico (Banxico) monetary policy decision would keep the exotic pair trading within familiar levels. The USD/MXN exchanged hands at 16.89, up 0.13%.
Mexico’s economic docket featured numbers linked to the automobile industry that were better than expected. However, consumer confidence has stalled, according to data revealed by the Instituto Nacional de Estadistica Geografia e Informatica (INEGI).
Meanwhile, most bank analysts estimated Banxico will keep interest rates unchanged with a unanimous vote by the Governing Council. Nevertheless, some expect the following meetings to be live, which could trigger split votes as two Deputy Governors, Irene Espinosa and Jonathan Heath, expressed that inflation remains high and that rates must remain at higher levels.
Bank of America analyst Carlos Capistran expects Mexico’s central bank to cut rates by a quarter of a percentage point in August, September, November and December.
Across the border, Federal Reserve (Fed) officials would dominate the economic schedule, which would feature Initial Jobless Claims on Thursday and the release of the University of Michigan Consumer Sentiment survey on Friday.
Neel Kashkari crossed the newswires and said the most likely scenario would be to hold rates flat for an extended period. He added that if needed, the Fed would hike rates, adding that the US economy is in a good place.
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