USDMXN: Mexico GDP Contracts, Peso Whipsaws Ahead of Fed

MEXICO GDP USDMXN – TALKING POINTS:

  • USDMXN jumped aloft immediately following Mexico’s GDP information recover that showed a Latin American economy engaged by 0.2 percent in a initial quarter
  • Weaker expansion opposite Mexico’s services zone mostly contributed to a country’s deceleration in mercantile activity, though a Peso is holding adult comparatively good opposite a US Dollar
  • New to forex or looking for additional information to whet your trade skills? Check out this essay that covers Mexican Peso Fundamentals or download a giveaway DailyFX educational beam on How to Trade Economic News

Mexico expelled its 1Q 2019 GDP report this morning that indicated a 0.2 percent diminution from a prior quarter. The title number looks particularly unsatisfactory deliberation that a mercantile contraction widely missed researcher expectations of 0.3 percent expansion while President Andrés Manuel López Obrador approaching an assertive growth rate of 2.0 percent for 2019.

In a World Economic Outlook and Financial Stability Report published progressing this month, however, a IMF slashed Mexico’s mercantile expansion foresee once again to 1.6 percent. Today’s uninspiring information could potentially open a doorway to serve downward revisions.

MEXICO GDP GROWTH PRICE CHART: QUARTERLY TIME FRAME (OCTOBER 2011 THROUGH MARCH 2019)

Mexico Quarterly GDP Growth Price Chart

The diminution in Mexico’s latest GDP news may have been partly due to tension flaring up between the US and Mexico over their tentative USCMA trade deal recently – a ongoing uncertainty, that Mexico’s executive bank formerly highlighted as a risk, has approaching dampened consumer sentiment, business activity and mercantile growth.

Also, a US expelled a possess GDP news final week that illustrated a 1.2 percent dump in imports from Mexico. It now appears that this mostly impacted Mexico’s mercantile expansion – quite once deliberation a US accounts for roughly 80 percent of Mexico’s exports.

In fact, Mexico is now a largest trade partner with a US that could be a outcome of a US-China Trade War. The probability of a new slack in US expenditure and imports from Mexico stability poses a hazard that could materially drag down Mexico’s economy.

In addition, seeing that Mexico is the eleventh largest oil writer in a world, a new diminution in supply negatively impacted a oil exports that also contributed to reduce than approaching GDP.

USDMXN PRICE CHART: 15-MINUTE TIME FRAME (APRIL 28, 2019 TO APRIL 29, 2019)

USDMXN Price Chart Mexican Peso US Dollar After Mexico GDP Report

At first, USDMXN modernized steeply once a information was published though a Mexican Peso has given embellished waste opposite US Dollar. Price movement surrounding today’s GDP news saw a banking span vacillate easily between a 1-standard flaw trade operation of 18.893 to 19.096 distributed from USDMXN overnight pragmatic volatility that was highlighted yesterday.

Greenback gains opposite a Peso could be shrinking due to widespread USD debility voiced by a DXY US Dollar Index slipping scarcely 0.4 percent so distant today. Aside from a Euro mostly boring a US Dollar reduce in response to a Eurozone’s comparatively upbeat GDP report, expectations for a dovish Fed forward of a executive bank’s FOMC assembly tomorrow could be weighing negatively on USD crosses as well.

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– Written by Rich Dvorak, and Nancy Pakbaz, CFA

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