• Mexican Peso extended its losses for the second straight day as USD/MXN hit a 19.74 peak.
• Banxico cuts rates to 10.50%, weakening the Peso as economic activity cools and inflation projections rise for 2024.
• US PCE inflation edged lower, but core PCE remains within the Fed’s comfort range of 2%-3%.

The Mexican peso lost steam on Friday against the US Dollar after inflation data in the United States (US) edged lower and failed to underpin the Mexican currency. However, the recent Bank of Mexico — known as Banxico — decision to lower interest rates weakened the Peso. At the time of writing, the USD/MXN trades at 19.72, gaining 0.50%.

The Federal Reserve’s favorite inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, was lower than expected in August, according to the US Bureau of Economic Analysis (BEA). The same report showed that core PCE, which excludes volatile items like food and energy, ticked up by a tenth, yet it remains within the 2% to 3% range.

Further data showed that Personal Spending and Personal Income showed signs of deceleration, while the University of Michigan Consumer Sentiment for September, in its final reading, improved.

In Mexico, Banxico decided to cut interest rates from 10.75% to 10.50% in a 4-1 vote split on Thursday, with Deputy Governor Jonathan Heath dissenting after voting to keep rates unchanged.