Daily digest market movers: Mexican Peso capitalizes on US Dollar weakness on Monday
- Banxico Governor Victoria Rodriguez Ceja said, “When macroeconomic conditions and the inflationary outlook allow us to make additional adjustments to the reference rate to the one we already have, I consider that they would be gradual.”
- Mexico’s economy contracted for the fourth time in January. The Indicator of General Economic Activity plunged -0.6% MoM, below estimates of a 0.3% expansion, and slowed compared to December, missing estimates of 2.6% to print at 2%. Inflation in Mexico exceeded estimates of 4.45%, increasing by 4.48%, while core figures jumped above the consensus of 4.62% YoY to 4.69%.
- The outlook in Mexico suggests the economy is stagnating. A weak retail sales report, private spending falling sharply, and a contraction in economic activity justified Banxico’s rate cut. Nevertheless, they face stubbornly stickier inflation, keeping policymakers on their toes.
- The US economic calendar has featured Fed speakers led by Atlanta Fed President Raphael Bostic, who said he expects just one rate cut this year, adding that cutting rates too soon could be more disruptive. At the same time, his colleague, Chicago Fed President Austan Goolsbee, adheres to the majority of the board and expects three cuts, though he said he needs more evidence of inflation “coming down.”
- Recently, Fed Governor Lisa Cook echoed Bostic's comments, saying that cutting too soon increases the risk of inflation becoming entrenched. She added that the Fed’s dual mandate goals are moving toward better balance.
- New Home Sales for February decreased -0.3% MoM from 0.664 million to 0.662 million. The Chicago Fed National Activity Index improved from -0.54 to 0.05. According to the Chicago Fed, all four categories that compose the index improved on the month.
- Recently, the Dallas Fed Manufacturing Index plunged further from -11.3 in February to -14.4 in March. Wages and prices increased during the month, while expectations for future manufacturing activity generally improved.
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