Daily digest market movers: Mexican Peso depreciates as US inflation picks up
- Mexico’s inflation report on Wednesday capped the USD/MXN advance. Even though mid-month inflation rose by 4.63% YoY, above March’s reading and estimates of 4.48%, the Core readings slowed sharply to 4.39% YoY as projected, down from 4.69%. Despite being a mixed reading, core prices are beginning to cool down, depicting a clear downtrend in inflation.
- Citibanamex Survey showed that most analysts expect Banxico to hold rates unchanged at the May meeting. The median foresees a rate cut in June, while they estimate the main reference rate to end at 10.00%, up from 9.63% previously.
- Banxico Governor Victoria Rodriguez Ceja said that service inflation is not slowing as expected. She added that the Peso’s strength has helped to temper inflationary pressure and lower imported goods. She emphasized that Banxico would remain data-dependent.
- Mexico’s economy is faring well as Economic Activity expanded in February compared to January’s data. Figures increased by 1.4% MoM and 4.4% YoY in the second month of the year, up from January’s 0.9% and 1.9% expansion, respectively.
- Other data in the US showed that the labor market remains tight as Initial Jobless Claims for the week ending April 20 missed estimates of 214K, coming at 207K, less than the previous reading.
- Data from the Chicago Board of Trade (CBOT) suggests that traders expect the Fed funds rate to finish 2024 at 5.035%, up from 4.98% on Wednesday.
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