- July’s headline inflation in Mexico is expected to reach its highest level in over a year, which could influence the Central Bank of Mexico’s interest rate decision.
- The Mexican Peso has been under pressure, extending its losing streak against the US Dollar.
Mexico’s inflation data will be released Thursday morning, closely followed by the Central Bank of Mexico’s interest rate decision in the afternoon.
July’s headline inflation in Mexico is expected to have accelerated to its highest level in over a year, according to a Reuters poll. However, the core index is anticipated to continue its moderation.
Rising prices in July could complicate any plans for the central bank to lower its key interest rate this week. In late June, the central bank opted to keep its benchmark interest rate unchanged after a rate cut in March, the first since mid-2021 when it began its tightening cycle.
The Mexican Peso has extended its losing streak to four consecutive days against the US Dollar, marking ten losses in the last eleven sessions.
The currency closed above the psychological 19.00 level for two days, having surpassed the previous year-to-date high of 18.99. Market momentum could favor sellers, with the Relative Strength Index indicating overbought conditions. The immediate resistance might stand at the current year-to-date high of 20.22.
On the downside, a breach of the 19.00 support level could open the path to the August stumble close to 18.50, followed by the 50-day Simple Moving Average at 18.20.
