The Mexican Peso trades at 18.60 as Banxico commits to a 6.25% rate hold, offsetting pressure from a stronger US Dollar that hit an 18-month high of 102.96 amid renewed Fed tightening bets.
October US CPI beat forecasts (core steady at 0.3% MoM, above the 0.2% estimate), lifting bets on a 25bp Fed hike in December per CME FedWatch, with Deutsche Bank and Goldman Sachs calling for a hike. The index is up 0.69% to 102.91 after touching an 18-month high of 102.96, though the move is already largely priced in.
Banxico's Governor said holding the rate at 6.25% for an extended period will support inflation converging to target, reducing odds of further near-term cuts and supporting the Peso. October inflation rising from 3.45% to 3.75% YoY, above forecasts, suggests policy was already too loose, which favors a hawkish hold. This contrasts with Fed hike bets strengthening, which caps the Peso's gains.
The pair trades at 18.60, down on the day, as the Peso recovers after last week's 0.45% loss. Banxico's Governor signaled the rate will stay at 6.25% for an extended period, supporting the Peso, while Mexico's October inflation rising from 3.45% to 3.75% argues against further near-term cuts. A strong Dollar on Fed hike bets limits the downside for the pair.
The Mexican Peso shows resilience, trading at 18.60 against the US Dollar as Banxico Governor Rodriguez Ceja signals a prolonged pause at 6.25%. While the US Dollar Index climbed 0.69% to 102.91 on rising Fed hike expectations, Mexico's October inflation print of 3.75% YoY provides a hawkish backdrop that supports the local currency.
US inflation in October exceeded forecasts, which increased bets that the Fed will hike rates by 25 basis points in December, pushing the index up 0.69% to 102.91.
She said the board had been considering a cut since October and that keeping the rate at 6.25% for an extended period will support inflation converging to target and address external challenges.
The Peso recovered ground after Banxico signaled it will hold rates at 6.25% for an extended period, even as stronger US inflation pushed the Dollar higher.
First support sits near the triple SMA around 18.01, then 16.89; above those, the pair is seen biased to extend higher once new resistance forms.