USD/MXN FALLS BELOW KEY TECHNICAL LEVELS AMIDST US GROWTH SLOWDOWN, MEXICAN RECORD EXPORTS

The USD/MXN erased its Wednesday’s gains, dropping below crucial technical levels, after growth in the United States (US) decelerated, via a report for the Commerce Department. That, alongside a tranche of US economic data, softened the greenback. At the time of writing, the USD/MXN is trading at 18.0548, down 0.50%.

USD/MXN at two-day lows, eyeing 18.0000

The Mexican Peso (MXN) regained its strength, underpinned by lower-than-estimated growth in the US. The US Department of Commerce revealed the GDP Advance for Q1 2023 rose by 1.1% QoQ, below estimates of 2%. In the same report, quarterly core inflation aimed towards 5%, at 4.9%, exceeded forecasts and justified the Fed’s May rate rise increase.

The CME FedWatch Tool predicts there’s a chance of 87.1% for a 25 bps at the May meeting by the Fed. That paints a possible scenario of stagflation: the US economy decelerates while inflation continues to be sticky above the Fed’s target twice and a half.

On another data, the US Department of Labor (DoL) revealed that Initial Jobless Claims were lower than estimated, snapping three consecutive reports that flashed signs that the labor market was easing.

Aside from this, Mexico’s exports reached a record $53.6 billion, with the country printing a surplus, due to the arrival of investments and factories across the US border.