Mexican Peso dives in reaction to US Dollar’s gain on PMI strength

Mexican Peso drops as a reflection of financier response to positive UnitedStates production figures and a rise in Treasury yields.
Mexico’s production sector reveals stability, however morepowerful UnitedStates financial outlook eclipses domestic favorable information.
Despite interest rate differential preferring Mexican Peso, tips emerge of possible Banxico rate cuts.

The Mexican Peso starts the week on a lower note versus the US Dollar, toppling 0.57% after strong financial information from the United States (US) that might avoid the Federal Reserve (Fed) from cutting loaning expenses. That and a softer production activity report in Mexico kept the Greenback quote versus the emerging market currency. The USD/MXN trades at 16.65, up 0.62%.

Mexico’s S&P Global Manufacturing PMI came at 52.2, essentially thesame from 52.3 in February. Pollyanna de Lima, financial associate director at S&P Global, stated, “Mexico’s production sector broadened additional in March, underpinned by a strong increase in domestic brand-new orders as pending agreements continued to get the green light. This resilient customer cravings had favorable effects on factory production, purchasing levels and work.”

Across the border, the Institute for Supply Management (ISM) exposed that production activity broadened for the veryfirst time in the UnitedStates consideringthat September 2022, while an index of rates paid remarkably leapt to levels last seen in August 2022.

The information sentout US Treasury yields escalating, while the US Dollar Index (DXY) skyrockets above 105.00 and gains 0.49%. Upbeat information weighs on the Mexican currency, which hasactually been valuing by the large interest rate differential inbetween Mexico and the UnitedStates.

Daily absorb market movers: Mexican Peso treads water after strong UnitedStates production activity figures

Last Monday, Banxico Governor Victoria Rodriguez Ceja stayed dovish regardlessof acknowledging that the fight versus inflation hasn’t been won. She included, “When macroeconomic conditions and the inflationary outlook enable us to make extra modifications to the referral rate to the one we currently have, I thinkabout that they would be steady.”
A weaker Mexican Manufacturing PMI, along with the Indicator of General Economic Activity contracting in January, might open the door for more reducing by Banxico. The newest conference minutes will be launched on April 4.
The ISM Manufacturing PMI broadened by 50.3, above projections of 48.4, smashing February’s 47.8 reading. The Prices Paid Index broadened to 55.8, its greatest level consideringthat August 2022, when it hit 52.5.
S&P Global exposed the mostcurrent modification of March’s Manufacturing PMI for the United States, which came in at 51.9, up from the previous reading of 52.2.
Last week, the Core Personal Consumption Expenditure (PCE) rate index, the Fed’s preferred gauge for inflation, cooled as anticipated.
Chair Powell stated at San Francisco Fed: “The reality that the UnitedStates economy is growing at such a strong speed, the truth that the labor market is still extremely, extremely strong, offers us the possibility to simply be a little more positive about inflation coming down before we take the essential action of cutting rates.”