Mexican Peso strengthens as Powell pivot weighed on US Dollar

• Mexican Peso rallies sharply with USD/MXN falling over 2%.
• Mexico’s economy shows mixed signals, with Q2 GDP growth at 2.1% YoY but a contraction in economic activity, as Banxico debates the appropriateness of recent rate cuts.
• Powell’s speech at Jackson Hole hints at upcoming rate cuts.

The Mexican Peso rallied sharply against the Greenback on Friday after Federal Reserve (Fed) Chair Jerome Powell announced that the central bank is ready to begin its easing cycle. This undermined the US Dollar, which is tumbling to a new yearly low, according to the US Dollar Index (DXY). Therefore, the USD/MXN collapses over 2% and trades at 19.06 after retreating from a daily peak of 19.53.

The USD/MXN extended its losses on Powell’s remarks, who said, “The time has come for policy to adjust.”