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5 May 2016
USD/MXN approaches 18.00, Banxico leaves rates unchanged
USD/MXN is rising for the fourth day in a row and it continues to move toward 18.00. A few minutes ago the Bank of Mexico (Banxico) left interest rates unchanged as expected at 3.75%; the pair moved further to the upside and printed a fresh daily high at 17.90, the strongest level in a month.
In a statement, Mexico’s central bank said that inflation risks remain as balanced as the previous meeting. Officials expect the CPI to rise to 3% by year-end. They warned about the possibility of renewed financial volatility, fearing an impact on the peso exchange rate, giving a signal that it could raise rates when needed.
The last time it rose the key rate was back in February during an extraordinary meeting, a few days after the peso dropped sharply in the market. Since then the Mexican peso has appreciated against the US dollar. Many analysts expect the central bank to raise rates during the third and fourth quarter or even sooner if the Federal Reserve also hikes.
Inflation remains below the 3% target and economic indicators showed better-than-expected numbers in the first quarter, but Banxico affirmed that growth risks remain tilted to the downside.
USD/MXN remains in range
The pair continues to move in a wide range between 17.05 and below 18.00. After falling sharply from record high levels at 19.44, price found support above 17.00 late in March. Since then it has been moving sideways. From a technical perspective a consolidation on top of 18.00 could give further momentum to the US dollar, opening the doors to more gains.
In a statement, Mexico’s central bank said that inflation risks remain as balanced as the previous meeting. Officials expect the CPI to rise to 3% by year-end. They warned about the possibility of renewed financial volatility, fearing an impact on the peso exchange rate, giving a signal that it could raise rates when needed.
The last time it rose the key rate was back in February during an extraordinary meeting, a few days after the peso dropped sharply in the market. Since then the Mexican peso has appreciated against the US dollar. Many analysts expect the central bank to raise rates during the third and fourth quarter or even sooner if the Federal Reserve also hikes.
Inflation remains below the 3% target and economic indicators showed better-than-expected numbers in the first quarter, but Banxico affirmed that growth risks remain tilted to the downside.
USD/MXN remains in range
The pair continues to move in a wide range between 17.05 and below 18.00. After falling sharply from record high levels at 19.44, price found support above 17.00 late in March. Since then it has been moving sideways. From a technical perspective a consolidation on top of 18.00 could give further momentum to the US dollar, opening the doors to more gains.