The USD/MXN exchange rate moved sideways on Thursday after the latest Mexico inflation data. The pair retreated to a low of 17.32, where it has been in the past few days. This price is about 6.34% below the highest point in November. It has dropped by over 22% from its highest point in 2022.
Mexico inflation and US NFP data aheadThe USD/MXN pair reacted mildly to the latest Mexico inflation data. According to the country’s statistics agency, the headline Consumer Price Index (CPI) rose from 0.38% in October to 0.64% in November. That increase was lower than the median estimate of 0.72%.
Mexico’s inflation rose from 4.26% to 4.32% YoY, also lower than the median estimate of 4.40%. In addition, core inflation, which excludes the volatile food and energy products, dropped from 0.39% to 0.25%. It peaked at 8.7% in September last year.
The Producer Price Index (PPI) also continued dropping. It moved from 1.40% to 1.20% on a YoY basis. It also slipped from 0.50% to minus 0.40%. These numbers mean that the country’s inflation is moving in the right direction.
They also mean that Banxico now is in a good position to start cutting interest rates in the coming months. The officials started deliberating about these cuts in the November meeting and hinted that it would come out in the first quarter of 2024.
Looking ahead, the next important catalyst for the USD to peso exchange rate will be the upcoming US non-farm payrolls (NFP) data. Economists polled by Reuters believe that the economy added over 180k jobs in November after adding 150k in October.
They also expect that the unemployment rate remained at 3.9% while wage growth rose by 3.9%. These numbers are important because of their implications on the Federal Reserve’s actions.
USD/MXN technical analysis
The USD to MXN exchange rate has slipped from its November high of 18.48 and has now moved to a low of 17.30. Additionally, the pair moved below the 50-day Exponential Moving Average, signaling that bears are in control.
The USD/MXN price has remained above the ascending trendline shown in green. This trendline connects the lowest swings since July. Therefore, the outlook for the pair is neutral with a bearish bias. More downside will be confirmed if it moves below the ascending trendline. If this happens, the next point to watch will be at 17.00.
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