MEXICAN PESO SOARS TO SEVEN-WEEK HIGH ON WEAK US DOLLAR AMID SOFT US ECONOMIC DATA

• Mexican Peso strengthens, marking over 0.5% weekly gain as USD/MXN reaches a new seven-week low at 16.91.
• US ISM Services PMI for February indicates a slowing economy, fueling speculation of forthcoming Federal Reserve rate cuts.
• US Dollar Index dips slightly as market participants increasingly anticipate a potential policy shift by the Fed toward easing interests by year-end.

The Mexican Peso appreciates sharply against the US Dollar, extending its weekly gains to more than 0.5% as the USD/MXN plunges sharply below the 17.00 figure, falling to a seven-week low. Economic data from the United States (US) showed the economy is slowing and weighed on the Greenback as the Federal Reserve’s (Fed) rate cut speculations grew. The USD/MXN trades at 16.91, down 0.21%.

Mexico’s economic docket was empty on Tuesday, but one day ago a report by the National Statistics Agency (INEGI) showed that Gross Fixed Investment in December remained flat MoM. Nevertheless, on an annual basis, it dipped from 19.2% to 13.4%.

In the US, the latest Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI) revealed that the sector cooled down in February, spurring worries about an economic downturn. Therefore, investors had begun to readjust their expectations of possible Fed interest rate cuts toward the end of the year. Consequently, the US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, dropped 0.06% to 103.77.