USD/MXN rises for the third day in a row despite Mexican GDP data

The Mexican peso is falling against the US dollar for the third day in a row. Today’s Mexican economic data surpassed expectations but did not stop the recovery of the greenback. 

USD/MXN rose from 17.75 and peaked at 17.89, the strongest level in two weeks. Currently, the pair trades at 17.83 and is consolidating above the relevant technical area of 17.80. 

Despite today’s gain, the pair is about to end July with a decline of 1.60%. A weaker US Dollar across the board, an improvement in Mexican macro numbers, positive expectations about the renegotiation of NAFTA and higher oil prices (up 8.5% on average in July) supported the downside bias in the pair. Two weeks ago it bottomed at 17.44, the lowest since May 2016.

Mexican GDP: not as bad as expected

Today, the INEGI (National Statistics Institute) reported that economic growth in Mexico slowed but less than expected during the second quarter. GDP expanded 0.6% from the previous quarter, above the 0.2% expected by economists. The annual rate slowed down from 2.7% to 2.4%. The service sector showed strong numbers that offset a modest growth in industrial production. 

Higher rates, inflation and the renegotiation of NAFTA appears to be the main risks to growth during the second quarter. The next GDP reading will be released August 22 while the next policy meeting from the Bank of Mexico is on August 10.