- Mexican peso erases gains versus a stronger US Dollar across the board.
- Banxico likely to keep rates unchanged, US data surpass expectations.
The USD/MXN rebounded sharply during the American session amid a reversal in the US Dollar. The pair bottomed earlier at 18.97, the lowest level in a week, but it was rejected from below 19.00.
After the release of better-than-expected US data, the greenback gained momentum across the board pushing USD/MXN further to the upside. Housing data, initial jobless claims and the Philly Fed came in above expectations. The pair jumped to 19.14, rising almost 1% from day’s low. As of writing trades at 19.07, modestly higher for the day.
The rally in crude oil prices eased the bullish pressure. The WTI is up by 2%, after rising almost $1 over the last two hours.
Banxico meeting eyed
In a few hours, the Bank of Mexico will announce its decision on monetary policy. The key rate is expected to remain unchanged at 8.25%. “While inflation expectations, a key constraint to policy easing in Mexico, are finally showing a propensity to ease, the chances of easing beginning this year are being rendered less likely by a near term spike in inflation momentum. We continue to see the first cut happening in Q1 of 2020 and expect Banxico to retain a hawkish tone at today’s meeting”, explained TDS analysts.