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MXN Buoyed By July CPI Data, Focus Turns To Banxico Rate Decision

MEXICO
  • The slightly higher than expected Mexico inflation data earlier and the dip in US initial jobless claims has leant some support to the Mexican peso, which is now ~0.8% firmer against the dollar on the day. USDMXN is currently trading close to 19.14, more than 5% below Monday’s high.
    • While headline inflation rose more than expected in July, core inflation did continue to moderate, while the bi-weekly data showed an easing of price pressures in H2 July, following a food-driven spike in H1.
    • Focus turns to Banxico’s interest rate decision at 2000BST, which remains finely balanced with a very narrow majority of analysts favouring a 25bp cut to 10.75%.
    • For USDMXN, a bullish theme remains intact and the pullback is considered corrective. Support to watch lies at 18.6918, the 20-day EMA.

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