Daily digest market movers: Mexican Peso recovers as Banxico rate cut speculation grows ...từ Wulan Viana

29 Feb 2024, 14:35 · Views 125

Mexico posted a $302 million trade deficit in January when adjusted for seasonal swings.
The latest inflation report in Mexico showed that headline and underlying inflation continued to dip toward Banxico’s goal of 3% plus or minus 1%, while economic growth exceeded estimates but finished below Q3’s 3.3%.
- Mexico’s Consumer Price Index (CPI) in the first half of February was 4.45%, down from 4.9% YoY.
- Mexico’s Core CPI slowed from 4.78% to 4.63% on an annual basis.
- Mexico’s GDP for Q4 2023 exceeded estimates of 2.4% YoY and hit 2.5%, less than Q3 2023 print of 3.3%.
Economic trade issues between Mexico and the US could depreciate the Mexican currency if the Mexican government fails to resolve its steel and aluminum dispute with the United States. US Trade Representative Katherine Tai warned the US could reimpose tariffs on the commodities.
In January, US Durable Goods Orders significantly declined to -6.1% MoM, exceeding the anticipated contraction of -4.5% and marking a steeper fall compared to December's -0.3% decrease.
In December, the S&P/Case-Shiller Home Price Index indicated a monthly decline of -0.3%, a slight acceleration in the contraction pace from November's -0.2%. On an annual basis, home prices rose by 6.1%, surpassing both expectations and the growth rate from the previous month.
The last meeting minutes of the US Federal Reserve (Fed) showed that policymakers remain hesitant to cut rates amid fears of a second round of inflation. They have expressed willingness to adjust policy when necessary but remain cautious, indicating no urgency to act. This stance is supported by current economic data suggesting strength in the economy, which could potentially revive inflationary pressure.
Market players had trimmed the odds for the first 25 basis point (bps) rate cut in June, with odds lying at 53%, while 36% of investors expected the Fed to keep rates unchanged at the current level of 5.25%-5.50%.

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