Daily digest market movers: Mexican Peso weighed by hawkish comments of Fed’s Waller
- On Monday, Banxico Governor Victoria Rodriguez Ceja remained dovish via an interview with El Financiero. Governor Rodriguez commented that the battle against inflation hasn’t been concluded, though adding that it would discuss further rate cuts to the main reference rate in upcoming meetings. “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.”
- Banxico revealed that international reserves grew to $216.9 billion, adding $411 million in US Dollars through March 22.
- Mexico’s Balance of Trade in February printed a deficit of $-0.5 billion, lower than the $-4.31 billion in January but missing expectations of $-0.2 billion. Other data showed that the Unemployment Rate in February dropped from 2.9% to 2.5%, which is below the consensus of 2.8%.
- Mexico’s Indicator of General Economic Activity flashed signs of contraction in January, justifying Banxico’s 25-basis-point rate cut on March 21.
- Fed Governor Christopher Waller delivered hawkish remarks on Wednesday, said that rates need to be higher for longer than expected and that more inflation progress is needed before supporting a rate cut. He sees the beginning of the easing cycle in 2024, though he suggests that back-to-back months of inflation data heading to 2% are needed.
- The GDP in the US rose by 3.4%, exceeding the preliminary reading of 3.2%, an indication of a strong economy. The Core Personal Consumption Expenditure (PCE) for Q4 2023 hit the Fed’s target of 2% QoQ.
- Initial Jobless Claims for the week ending March 23 rose to 210K, below market expectations of 215K and lower than the previous week. The data shows that the labor market remains tight, which could deter the Fed from cutting rates.
- The University of Michigan Consumer Sentiment index rose to its highest level since July 2021, climbing to 79.4, exceeding estimates of 76.5. Pending Home Sales recovered in February, increasing 1.6% MoM after plunging -4.7% in January and above the consensus of 1.5%.
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