USDMXN: Dollar Continues Winning Streak as Fed Meeting Looms
© Reuters.
By Ileana Garcia Mora
The US dollar has opened Wednesday on a high note and is predicted to stay on the winning path. The Federal Reserve is expected to maintain the current upward cycle in interest rates thanks to better than expected inflation.
The Value of the Dollar Today
As of 05:00 am Central Mexico time, the dollar exchange rate is found at $17.19 pesos, representing an appreciation of 0.18%. These real-time data sets are available on Investing.com.
The price of the dollar yesterday closed at the level of $17.22, with its maximum level at 17.33 and a minimum level of 17.19 amid a general decline in the US dollar. According to Janneth Quiroz Zamora, director of Currency Analysis at Grupo Monex, “the next target is $17.15, which corresponds to the Fibonacci of 141.4% of the movement between May 16 and 23,” in a report.
Federal Reserve Decision and Market Expectations
The Federal Reserve will be announcing their decision this afternoon at 12:00 p.m. Central Mexico, in a context of downward inflation and strength of the labor market. Any pause in the upward cycle of the interest rate would leave the reference interest rates at the current level of 5% to 5.25%.
According to market studies, consumer inflation in the United States fell to 4.0% in May, the lowest since March 2021. This data was slightly lower than market expectations that pointed to annual general inflation of 4.1%. On the other hand, core inflation, which excludes food and energy, slowed to 5.3%, the lowest since November 2021. Monthly inflation was 0.1% in May, a level below the 0.4% in April and similarly below the market’s expectations of 0.2%.
Jerome Powell in Focus as Update on Dot Plot is Expected
The update of the Fed’s dot diagram will be under close scrutiny, along with the statements of Jerome Powell, in search of information regarding the monetary authority’s future plans. Although it is expected that the pause in the June cycle will be confirmed, there could be an increase in the rate for next month’s decision should conditions merit such a move.
Inflation remains far from the Fed’s goal of 2%, while the labor market continues to remain strong. This puts more pressure on the prices of products and services across the United States.
Upcoming Monetary Policies from other Central Banks
The European Central Bank will announce its decision tomorrow, and expectations point to a new increase of 25 basis points. On Friday, the Bank of Japan will also announce its monetary policy decision, and it is expected to keep the interest rate unchanged.
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