The Mexican peso strengthens at the start of the week following lower-than-expected inflation data.

The Mexican peso gained ground against the dollar in Monday’s trading. The currency appreciated after lower-than-expected inflation data in Mexico, while the market awaits key price reports from the United States.

The exchange rate closed the day at 19.8939 pesos per dollar, compared to 19.9984 units yesterday, according to official data from the Bank of Mexico (Banxico). This move represented a gain of 10.45 cents or 0.52% for the peso.

The price of the dollar fluctuated between a high of 20.0140 units and a low of 19.8083 pesos. The U.S. Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six major currencies, was up 0.43% at 101.62 units.

Mexico’s annual inflation moderated last month. The National Consumer Price Index (INPC) recorded a 0.01% increase, bringing the overall annual inflation rate to 4.99%, according to the National Institute of Statistics and Geography (Inegi).

The Mexican peso benefited from the positive inflation report, which showed a decrease in general inflation after five consecutive months of increases, while core inflation has been declining for 19 months.

Investors are now awaiting two key price reports to be released in the U.S. on Tuesday and Wednesday. Meanwhile, locally, attention remains focused on the ongoing discussion in the Senate regarding the reform of the Judicial Branch. This week, traders will closely watch U.S. consumer and producer price data, monetary policy developments in the Eurozone, and the Judicial Branch reform in Mexico.

Although the price level has eased significantly, it remains well above the inflation target set by the Bank of Mexico (3% +/- one percentage point).