Mexican Peso Falls Amid Market Focus on the Federal Reserve
The Mexican peso lost ground as the market awaits tomorrow’s final Federal Reserve decision of the year, following two retail sales reports.
The peso closed lower against the dollar in Tuesday’s session. The USD/MXN ceded ground as the market anticipates the Fed’s last decision of the year, amid two retail sales reports.
The exchange rate ended the day at 20.2214 per dollar, compared to yesterday’s close of 20.1255, marking a drop of 9.59 cents, or 0.48%, according to data from the Bank of Mexico (Banxico).
The dollar ranged between a high of 20.2900 and a low of 20.1011 during the session. The Dollar Index (DXY), which compares the U.S. dollar to six major currencies, was up 0.13% at 107.00.
Fed Meeting and Global Matters
The dollar strengthened globally ahead of the Fed’s policy announcement. The FedWatch tool, which tracks U.S. interest rate futures, indicates a 95.4% chance of a 25 basis point rate cut to 4.25-4.5%.
However, given the recent employment and inflation data, as well as comments from Fed members, investors believe that rate adjustments will slow next year. Therefore, market attention will focus on the Fed’s statement.
While a 25-basis-point rate cut is widely expected tomorrow, questions remain about how the Fed will update its economic projections, particularly regarding rate cuts for 2025.
In economic data, retail sales reports were released today in both Mexico and the U.S. The Mexican data showed an unexpected 0.3% monthly decline in October, while U.S. retail sales grew 0.7%, driven by car sales.
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