Mexico's January CPI came in at 2.61% y/y, higher than markets expectation of 2.52%. However, the peso failed to make the most out of this data as the economy continues to remain under disinflation and the markets don't expect the Fed to hike rates for the time being. Moreover, Banxico is unlikely to hike rates based upon one upbeat CPI data.
Although, Banxico intended to closely follow the rate hike cycle of the US Fed, there are no reasons for traders to go long on peso positions immediately. It's important to note in this context that peso valuations are highly correlated with oil prices. Given such a scenario, a convincing upward move from Peso is unlikely to be seen in the short term. USD/MXN is currently trading at 18.69 levels at the time of writing.
