The Mexican peso is on track to post its second consecutive week of losses against the U.S. dollar as traders focus on the U.S. Federal Reserve’s monetary policy decision on Wednesday, July 31.
According to real-time data on Investing.com, the dollar was trading at 18.35 pesos per dollar as of 4:30 a.m. EST, up 0.48%.
In the previous session, the peso closed at 18.44 pesos per dollar, showing a depreciation of 0.42% and touching a maximum of 18.5880 and a minimum of 18.3196 pesos per dollar. From a weekly perspective, the currency is on track to close with a depreciation of 1.74%, depending on the performance of the exchange rate today.
Fed Rate Decision in Focus
Market operators will be closely watching the monetary policy decision by the United States Federal Reserve, which will be next Wednesday, July 31, at 1:00 p.m. (Central Mexico time). Most analysts assume that at the next meeting, FOMC members will announce that the benchmark interest rate will remain unchanged in a range of 5.25-5.50% and that the first cut will come in the September decision. Following the decision, Fed Chairman Jerome Powell will hold a press conference in which he will elaborate on the reasons the members made for their decision. Investors will be very attentive to look for clues about the new steps taken by the issuing body in monetary policy.
US Economy Expands
The other highly relevant data of the week was the publication of the US GDP for the second quarter, which showed an annualized quarterly growth rate of 2.84%, a figure better than the 2% expected by the market. At an annual rate, US growth was 3.12%. “The economic strength of the United States benefits Mexico through exports and the inflow of remittances, which in the short term allows speculation in favor of the peso. However, the GDP data generate speculation that the Fed will not be able to cut the interest rate twice this year,” explained Gabriela Siller, director of Economic and Financial Analysis at Banco Base in a market closing report.
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The Mexican peso is on track to post its second consecutive week of losses against the U.S. dollar as traders focus on the U.S. Federal Reserve's monetary policy decision on Wednesday, July 31.
According to real-time data on Investing.com, the dollar was trading at 18.35 pesos per dollar as of 4:30 a.m. EST, up 0.48%.
