The Mexican peso strengthened to over 20.19 per US dollar, recovering from a low of 20.64 on November 26, 2022, as hawkish signals from the Bank of Mexico combined with dovish expectations for the US Federal Reserve.
Mexican peso strengthens on Thursday
November's US inflation data, which showed a slight increase in headline inflation and steady core CPI, heightened expectations that the Federal Reserve will lower rates in its upcoming December meeting. Domestically, Mexico’s inflation eased, with the headline inflation for November falling to 4.55% year-over-year, its lowest in eight months, and core inflation dropping to 3.58%, the softest level since April 2020.
Mexico’s unemployment rate fell
Additionally, Mexico’s unemployment rate fell to 2.5% in October, the lowest since March and well below the forecasted 2.9%. This positive economic data bolstered expectations for continued flexibility in Banxico’s rate-cutting cycle, in line with Governor Irene Espinosa’s cautious outlook ahead of the December 19 meeting.
