Nov 08, 2024 (MENAFN via COMTEX) --
(MENAFN - Investor Ideas) Investorideas ( ), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia, Expert Research Strategist at Pepperstone.
"The Mexican peso is experiencing its best performance since September, supported by several factors that have contributed to its strengthening throughout the day. Today, we received the October inflation data in Mexico, which showed a mixed dynamic. Core inflation remained in a disinflationary trend, reaching its best level since January 2021, which is good news for Banco de Mexico, especially considering the last two monetary policy meetings scheduled for the year. However, headline inflation showed a surprising rebound, exceeding market expectations.
Additionally, we are witnessing a decline in the U.S. Dollar globally. The dollar had experienced a significant rally, driven by expectations of a possible return of Donald Trump to the White House, which, for now, appears to be an initial market overreaction. This adjustment in the dollar has also benefited the peso, which managed to temporarily break the psychological level of 20 pesos per dollar.
Another positive factor for the peso has been the focus on U.S. Federal Reserve rate cut expectations. Markets have largely priced in that the Fed will cut interest rates for a second time, though with a more moderate adjustment of 25 basis points this time. This has eased pressure on the Mexican peso and opened a window for short-term appreciation.
However, it is important to note that although the peso has shown renewed strength, there are still significant risks that could limit a sustained rally. The prospect of a Republican administration under Donald Trump could lead to a more restrictive stance that could eventually weigh on the Mexican currency.
In conclusion, the peso's performance has been bolstered by a combination of factors, both local and international, but the situation remains fragile."
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