Mexican Peso looks for thin gains on Monday

• The Mexican Peso gave back 0.6% against the US Dollar on Monday.
• Mexico has limited representation on the economic calendar this week.
• Jackson Hole looms large in the week ahead alongside US PMI figures.

The Mexican Peso (MXN) returned one quarter of one percent to Greenback bidders on Monday, paring back recent gains as Peso bulls took a breather. The US Dollar is broadly softer across the board to kick off the new trading week, but recent Peso-positive flows have briefly reversed direction.

Mexico has a scant release schedule on this week’s data docket, and all figures slated to print this week on the Peso side are strictly low-tier numbers. Mexican Retail Sales for the year ended in June are due on Tuesday, and are expected to contract by 1.8% YoY compared to the previous 0.3% growth. 

Fortnightly headline and core Mexico inflation figures are due on Thursday. Core Inflation is forecast to tick up slightly to 0.19% from 0.18% in the first half of August, while headline Inflation is forecast to slump to 0.13% over the same period, down sharply from the previous 0.71%.

Daily digest market movers: Greenback goes belly up, but Peso flows need a breather

• Peso bidding has reversed course on Monday, paring back the MXN against the US Dollar.
• Despite a brief easing in buying pressure, the MXN is still up 6.6% against the USD as the Peso recovers from a 22-month low.
• Markets are broadly looking ahead to this week’s kick-off of the Jackson Hole Economic Symposium, where rate-cut-hungry investors will be hanging on every word from Federal Reserve (Fed) policymakers.
• Recent bets of a double cut in September have eased significantly after reaching a peak of 70% two weeks ago. According to the CME’s FedWatch Tool, rate markets are pricing in a scant one-in-five chance of a 50 bps cut on September 18.
• Overall, markets still have a 25 bps cut in September fully priced in, with three or four quarter-point cuts expected by the end of the year.

Mexican Peso price forecast: Pullback leaves Peso bidders primed for another leg, but technical limits remain

The Mexican Peso’s recent recovery against the US Dollar has sent USD/MXN bids skidding toward 18.50. Still, a long-run bullish trend in the chart leaves Peso bidders grappling with an accelerating pattern of higher lows as the Greenback trends higher against the MXN. 

Price action is poised for a continued decline into the 50-day Exponential Moving Average (EMA) at 18.35, with a hard floor priced in at the rising trendline drawn from April’s lows near 16.25. 

USD/MXN daily chart