The Mexican peso is trading close to the key 20.00 level against the US dollar as investors await monetary policy decisions from both the Federal Reserve and the Bank of Mexico. Strong US economic data has fueled expectations of a hawkish stance from the Fed, despite its expected rate cut.
The Mexican peso (MXN) is trading rangebound on Tuesday, at a short distance of the key 20.00 level against the US Dollar (USD). Investors are bidding their time ahead of key monetary policy decisions by the Federal Reserve (Fed) and the Bank of Mexico (Banxico) this week.
US preliminary S&P Global Purchasing Managers Index (PMI) data released on Monday revealed an unexpected improvement in services activity in December, and the market is bracing for a strong consumption reading for November later today. These figures support the rhetoric of the US economic exceptionalism and bolster the case for very gradual Fed interest rate cuts next year. This sentiment keeps investors’ appetite for risk in check, boosting the US Treasury yields and buoying the US Dollar across the board. In Mexico, retail consumption is expected to have picked up in October, still at levels well below last year in the same month. Consumer inflation and industrial output data disappointed last week, bolstering the case for a 25 basis points (bps) rate cut by Banxico on Thursday
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