The Mexican peso saw a late rally after the Bank of Mexico (Banxico) reduced its key interest rate by 25 basis points to 10.25%, marking its third consecutive cut this year. This rate adjustment reflects Banxico’s optimism in controlling inflation, as recent data has shown a continued decline in core inflation levels.
Despite the rate cut, the peso’s strength suggests that investors may have anticipated the move and are now turning their attention to the upcoming US retail sales report. This data is expected to provide critical insights into consumer spending and could influence the Federal Reserve’s policy direction. A strong retail report might boost the dollar, creating downward pressure on the peso, while weaker numbers could support the peso by tempering rate hike expectations.
