Daily digest market movers: Mexican Peso appreciates on mixed US data
- Data published in April showed that Mexico’s inflation was mixed. Headline inflation rose, mostly attributed to a jump in Oil prices. Conversely, underlying prices dipped, justifying the Bank of Mexico’s (Banxico) decision to lower rates.
- Although most analysts estimate Banxico will keep rates unchanged at 11.00%, new data could prompt heated discussions among Banxico’s Governing Council members on May 9.
- Last week, Banxico Governor Victoria Rodriguez Ceja said the central bank would be data dependent. However, weak GDP data could lead to a “live meeting” on May 9.
- 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 the year at 10.00%, up from 9.63% previously.
- Measures of business activity in the US were mixed, as S&P Global Manufacturing PMI came at 50.0, higher than expected but trailing March’s 51.9. Contrarily, the ISM Manufacturing PMI came at 49.2, below estimates of 50.0, and signaling contraction in the sector once again after March’s expansion of 50.3
- ADP Employment Change rose by 192K in April, exceeding estimates of 175K but below March’s 208K upwardly revised figure. Further jobs data showed the JOLTS Job openings fell in March to their lowest level, from 8.813 million to 8.488 million.
- Fed is expected to keep rates unchanged at May 1 meeting, though traders will be eyeing Fed Chair Jerome Powell’s press conference. A hawkish tilt could trigger a jump in favor of the Greenback; otherwise, the USD/MXN could resume its downtrend.
- Data from the Chicago Board of Trade (CBOT) suggests that traders expect the fed funds rate to finish 2024 at 5.100%, up from 5.080% on Tuesday.
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