American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Investing

USD/MXN forecast ahead of Fed and Banxico rate decisions

by admin December 15, 2024
December 15, 2024
USD/MXN forecast ahead of Fed and Banxico rate decisions

The USD/MXN exchange rate has moved sideways in the past few weeks as traders eye the upcoming Federal Reserve and Banxico interest rate decision. The pair was trading at 20.11 on Friday, down by 3.45% from its highest level this month.

Federal Reserve decision

The USD/MXN pair will react to the upcoming Fed decision. In it, officials are expected to cut interest rates for the third time this year because of the relatively soft-ish labor market.

Data released earlier this month showed that the economy added over 200k jobs, while the labor participation rate retreated slightly. The unemployment rate rose slightly to 4.2% during the month.

These numbers mean that the labor market was not growing as initially expected. As a result, the Fed believes that cutting interest rates will help to ease the cost of doing business and boost the sector.

The Fed’s challenge is that US inflation is still a big challenge. Data released last week showed that the headline Consumer Price Index (CPI) rose from 2.4% to 2.6% in November.

Similarly, the core CPI remained unchanged at 3.3% during the month, much higher than the Fed’s target of 2.0%. Analysts expect that inflation may remain stubbornly higher, especially if Donald Trump implements his policies.

Trump has threatened to deport millions of undocumented migrants, a move that will affect key sectors of the economy like agriculture, hospitality, and construction. 

He has also pledged to impose large tariffs on imports, a move he hopes will reduce the trade deficit. However, as history has shown, tariffs don’t solve trade deficits since they are just added to the final cost of goods.

Trade deficit is usually the difference between imports and exports. For the US to lower it, it would need to reduce imports, while dramatically increasing exports. The challenge is that the US does not sell many goods to other countries because of the higher cost if doing business.

Banxico interest rate decision

The next important USD/MXN exchange rate news will come out on Thursday when Mexico delivers its interest rate decision.

Like other central banks, Banxico has embarked on a rate cutting cycle, a move it hopes will support the ailing economy. 

It started cutting rates in August, when it moved them from 11% to $10.75%. It has then cut rates two more times since then.

Economists see the bank cutting rates again in the next meeting as it prepares for the Trump era. In a recent X post, Trump warned that he would sign a 25% tariff on Mexican goods because the country has “allowed” illegal migrants 

The Banxico is supported by the recent inflation flows. Recent data showed that Mexico’s Consumer Price Index (CPI) slowed from 4.76% to 4.55% in November, inside the bank’s target. 

There are also signs that the Mexican economy is not doing well. It expanded by 1.6% in the third quarter, a big slowdown from the 2.1% growth in the previous quarter.

USD/MXN technical analysis

USD/MXN chart by TradingView

The USD/MXN exchange rate has remained under pressure in the past few weeks. It has retreated from a high of 20.82 to a low of 20.11. Along the way, it has moved below the lower side of the rising wedge chart pattern, a popular bearish reversal sign.

The pair remains between the 50-day and 25-day Exponential Moving Averages (EMA). It has also formed a double-top pattern at 20.82. A double-top is one of the most popular bearish signs in the market. 

Therefore, the USD/MXN pair’s path of the least resistance will be downwards, with the next point to watch being at 19.50.

The post USD/MXN forecast ahead of Fed and Banxico rate decisions appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
USD/RUB: Is it a good carry trade pair as BoR and Fed diverge?
next post
Dow, S&P 500 slip as investors assess hot producer price index; Adobe plunges, while Riot Platform jumps

Related Posts

Premier1 Lithium

February 14, 2024

Top reasons why the Hang Seng Index may...

April 16, 2025

Rivian stock price forecast: here’s why RIVN could...

November 14, 2024

Galan Secures Agreement with Glencore for Offtake &...

March 29, 2024

Aether Global Innovations Corp. Announces Resignation of its...

August 10, 2024

AT&T stock price is soaring: is it a...

April 6, 2025

Snap stock forecast: brace for big moves ahead...

October 29, 2024

Is the TSX Composite index a buy ahead...

January 29, 2025

How High Can the Gold Price Go? Mining...

May 18, 2024

Russia’s MOEX index has crashed, with 90% of...

December 20, 2024

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • How Donald Trump’s immigration crackdown may tank the labor market

      August 4, 2025
    • Trump’s tariff threat looms over India’s Russian oil deals

      August 4, 2025
    • Trump moves nuclear submarines near Russia: what triggered the move and what’s ahead

      August 3, 2025
    • BOE rate cuts offer little relief as UK households face mounting financial strain

      August 3, 2025
    • Retail investors shift focus to Europe as US valuations stretch

      August 3, 2025

    Categories

    • Business (3,583)
    • Investing (2,703)
    • Latest News (2,031)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved