USD/MXN slides below the 100-DMA hovering around 20.4400 after Banxico’s minutes By christianborjon USDMXN CentralBanks Mexico Macroeconomics
indices closed in the red, whereas the US equity markets advance, except for the Dow Jones, down some 0.34%.On Thursday, the Mexican central bank, also known as Banxico, released its last meeting minutes where the central bank hiked 50 basis points the benchmark rates, up to 5.50%.
The minutes showed that all of the members said that headline and core inflation expectations for 2021, 2022, and for the next 12 months increased again. Furthermore, the policymakers noted that economic integration with the US and high inflation levels spurred elevated prices in Mexico. Banxico’s members said that the forecasts of inflationary pressures were revised upwards, especially in 2022. Also, the minimum wage increase between the Mexican government and business groups of 22% could add upward pressures on labor costs, per Banxico’s policymakers noted.featured Initial Jobless Claims for the week ending on January 1, which showed an increase of 207K higher than the 197K estimated by economists. The 4-week moving average rose 204.5K, a tick more elevated than the 199.
The Institute for Supply Management reported that the Services PMI in the US fell from 69.1 in November to 62.0 in December. Despite contracting, a reading above 50 indicates growth in the services sector. On Wednesday, the Federal Reserve released its December minutes. The US central bank noted that monetary policy accommodation was unnecessary and that a faster reduction of its bond-purchasing program was needed before hiking rates. Moreover, Fed members began discussions of a contraction of its balance sheet, which was perceived by a hawkish signal by the markets, with investors selling stocks aggressively.
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