• Mexican Peso edges up against US Dollar for second consecutive day.
• Banxico’s decision to maintain the interest rate at 11.00%, sponsored the latest leg down on USD/MXN.
• Bank of Mexico cited higher prices as reason to pause lowering rates.
• US consumers become pessimistic on economy due to inflation, unemployment, interest rates.

The Mexican Peso extended its gains for the second straight day after the Bank of Mexico (Banxico) decided to keep rates at 11.00% due to a reacceleration of inflation. In the meantime, the University of Michigan (UoM) Consumer Sentiment deteriorated in May, weighing on the performance of the Greenback versus the Mexican currency. The USD/MXN trades at 16.77, down 0.01%

On Thursday, Banxico’s Governing Council decided to keep rates unchanged, citing the latest uptick in inflation. The bank said that even though the disinflation process is expected to continue, the central bank revised its inflation projection.

In its policy statement, Banxico noted, "Considering that inflationary shocks are foreseen to take longer to dissipate, the forecasts for headline and core inflation have been revised upwards for the next six quarters. In particular, services inflation is foreseen to show more persistence, as compared to what had been previously anticipated.”

The US economic docket revealed that American consumers became less optimistic about the economy. The University of Michigan survey said they’re concerned about inflation, unemployment and interest rates.

Recently, two Federal Reserve (Fed) officials made statements that have drawn attention. Fed Governor Michelle Bowman emphasized that the US central bank should act "carefully and deliberately" in its policy decisions. Meanwhile, her colleague, Lorie Logan of the Dallas Fed, expressed that it is too early to consider cutting interest rates.

Next week, the US docket will feature the release of inflation figures, retail sales, building permits and Fed speeches.