USD/MXN drops to 17.05 after July CPI data eases to 3.4% YoY, reducing expectations for Federal Reserve tightening.
The Mexican Peso surged to its strongest level since 2024, with USD/MXN falling to 17.05 after softer US inflation data reduced bets on a Federal Reserve rate hike. The pair hit an early low of 17.01 before stabilizing.
US July CPI matched forecasts, dipping to 3.4% YoY from 3.5%, while core CPI eased to 2.5% from 2.6%. The data follows a 23% jump in oil prices in July, though WTI remains below June levels. Analysts in a Citi survey expect Banxico to hold rates at 6.50% through year-end.
The US Dollar Index (DXY) rose modestly by 0.17% to 99.98, reflecting mixed sentiment as Fed officials signal potential rate hikes if inflation persists.