The Mexican peso gained ground against the United States dollar for the second consecutive session on Wednesday.
This appreciation was driven by United States consumer inflation data that aligned with analysts forecasts, reigniting speculation about potential interest rate cuts.The exchange rate concluded the day at 20.4915 pesos per dollar, a notable improvement from the previous days close of 20.5311 pesos.
This movement reflects an increase of 3.96 cents, translating to a 0.19 percent rise according to data from the Bank of Mexico (Banxico).Throughout the day, the dollar fluctuated between a high of 20.5634 pesos and a low of 20.3729 pesos.
The United States Dollar Index (DXY), which gauges the dollars performance against a basket of six major currencies, dipped by 0.11 percent to 109.06.The United States Consumer Price Index (CPI) rose by 0.4 percent in December, following a 0.3 percent increase in November, as reported by the Department of Labor.
Year-over-year, the CPI increased by 2.9 percent, compared to a 2.7 percent rise in November.These inflation figures, which matched analysts expectations, followed lower-than-expected United States producer prices reported the previous day.
This rekindled hopes for Federal Reserve rate cuts.Mexican Peso Strengthens Following United States Inflation Data.
(Photo Internet reproduction)Market participants had previously anticipated that rate cuts might be slower or even paused due to signs of strength in the United States economy.
This outlook contrasts with Banxicos stance, which suggests more aggressive cuts could occur this year.Mexicos Peso Dynamics and Fed ProjectionsThe recent projections regarding fewer rate cuts from the Fed have influenced exchange rates.
This is due to expectations of a narrower interest rate differential between Mexico and the United States Additionally, inflation concerns and trade tensions with former President Trump have placed further pressure on the peso.
Juan Carlos Cruz Tapia, a financial consultant, noted that the peso has strengthened following the United States inflation report.He indicated a potential move towards the lower end of its trading range around 20.30 pesos per dollar, as psychological levels have been significant early this year.
Overall, the pesos appreciation over these two days marks a cumulative gain of 23.20 cents.This represents approximately 1.12 percent since Mondays closing value of 20.7235 pesos per dollar.
The market remains attentive to forthcoming comments from Federal Reserve officials that may influence future currency movements.