• Mexican Peso pulls back after gaining over 1.50% last week, pressured by weaker Consumer Confidence.
• Banxico Governor Rodriguez justifies recent 25 bps rate cut amid 3-2 split decision, citing transitory inflation effects.
• Market focus shifts to key US inflation and retail sales data, USD gains momentum ahead of the releases.

The Mexican Peso retreats on Monday after posting solid gains of over 1.50% last week against the Greenback, with the latter posting decent gains ahead of a busy economic docket in the United States. Meanwhile, Consumer Confidence in Mexico dipped in July, which could be a prelude to the ongoing economic slowdown. The USD/MXN trades at 18.96 and gains over 0.80%.

Mexico’s National Statistics Agency announced that consumers grew less optimistic about the economic outlook and printed the second lowest reading since May’s 46.8 reading, revealed the Instituto Nacional de Estadistica Geografia e Informatica (INEGI).

In addition, Bank of Mexico (Banxico) Governor Victoria Rodriguez Ceja said in an interview with El Financiero that elements justified a 25-basis-point (bps) rate cut to the main reference rate amid a 3-2 split decision.

She acknowledged that despite headline inflation hitting 5.57%, she insisted it was unrelated to core prices, which decreased for the 18-straight month and reached 4.05% in July.

“We expect these effects of the shocks that we observe in non-core inflation to be transitory, so we are still expecting headline inflation to return to its target at the same time, at the end of 2025,” Rodriguez noted.