Anna 
On Tuesday, the Mexican Peso (MXN) experienced a slight decline in its most actively traded pairs, as market sentiment wavered amidst ongoing uncertainty surrounding the global interest-rate outlook and heightened tensions in the Middle East due to Israel’s actions in Rafah. Asian stock markets closed lower, with the Shanghai Composite down 0.46%, the Nikkei down 0.11%, and the ASX200 closing 0.28% in the red.
At the time of writing, the USD/MXN pair is trading at 16.68, EUR/MXN at 18.14, and GBP/MXN at 21.30.
The Mexican Peso saw marginal losses as the trading environment remained characterized by low volatility. Traders adopted a cautious stance, awaiting key releases such as April’s US Personal Consumption Expenditure (PCE) data, scheduled for Friday, which serves as the US Federal Reserve’s preferred gauge of inflation.
This week also brings Mexican Unemployment data for April on Thursday, while the Mexican Presidential elections are scheduled for Sunday. Current projections suggest that the Morena party candidate Claudia Sheinbaum is likely to succeed Manuel Lopez Obrador as President, maintaining the status quo.
Despite the recent softness, the Mexican Peso maintains an overall bullish trend in its key pairs, supported by the interest rate differential between Mexico and its major counterparts. Mexico’s high interest rates, currently at 11.00%, continue to attract investor inflows, bolstering the Peso.
While a recent Citibanamex survey indicated expectations for Banxico to cut interest rates in June, Banxico Deputy Governor Irene Espinosa expressed the view that interest rates should remain unchanged due to ongoing inflationary pressures. May’s mid-month headline inflation in Mexico rose to 4.78%, surpassing the previous month’s 4.63%, confirming the persistence of inflationary pressures and reinforcing Espinosa’s hawkish stance.
