Banco de Mexico, known as Banxico, unexpectedly cut the country’s main interest rate from 7% to 6.75% on Thursday on a 3-2 vote, with Deputy Governors Jonathan Heath and Galia Borja voting to keep interest rates unchanged.
The US Dollar Index (DXY) rallied about 0.30% on Thursday, climbing from a session low around 99.56 to trade close to 99.90 as the Greenback continued to attract safe-haven interest for a third consecutive trading day.
Mexico Banxico Interest Rate Decision below expectations (7%): Actual (6.75%)
Commerzbank economists Dr. Henry Hao and Moses Lim note USD/PHP rose to 60.10 after President Marcos declared a national state of emergency to tackle surging energy prices.
The US Dollar Index (DXY) surged to near 99.90, holding steady as safe-haven demand amid Middle East tensions and rate differentials underpinned the Greenback amid a cautious market mood.
The Euro (EUR) edges lower against the US Dollar (USD) on Thursday, with EUR/USD extending losses for a third consecutive day as ongoing geopolitical tensions surrounding the US-Israel war with Iran keep the Greenback firmly bid across the board.
Gold (XAU/USD) price plummets nearly 2.50% on Thursday as Oil prices rise amid uncertainty about a possible agreement between the US and Iran, adding upward pressure on inflation and pushing the Greenback higher. At the time of writing, XAU/USD trades at $4,394 after reaching a daily high of $4,544.
MUFG’s Senior Currency Analyst Lloyd Chan maintains a defensive stance on Asia FX as the US‑Iran conflict keeps external pressures elevated. Higher US yields and Oil prices are supporting the Dollar and weighing on Asian currencies such as THB, PHP and KRW.
Alan Taylor, an external member of the Monetary Policy Committee of the Bank of England (BoE), said that he currently sees a high bar to hiking the rates at a conference in New York hosted by Exante Data. He also added that the current energy shock looks more like the 2011 situation than the 2022.
NZD/USD extends its downward move on Thursday, trading around 0.5770 at the time of writing, down 0.65% on the day. The pair is now on its third consecutive day of losses after failing to hold near the 0.5900 area reached last week.
Standard Chartered Bank analysts Bader Al Sarraf and Razia Khan assess how the Middle East escalation and potential Strait of Hormuz disruptions could affect Gulf Cooperation Council (GCC) economies.
The Dow Jones Industrial Average (DJIA) fell around 230 points, or roughly 0.5%, on Thursday, giving back the previous session's gains as surging Oil prices and collapsing ceasefire optimism crushed risk appetite. The S&P 500 dropped 0.8%, while the tech-heavy Nasdaq Composite shed 1.1%.
