• Mexican Peso slumps to weekly low of 18.81 as disappointing GDP data sparks USD buying.
• Mexican Q2 GDP growth at 0.2% QoQ, below estimates of 0.4%, trails Q1's 0.3%.
• Economic slowdown increases odds of Bank of Mexico rate cut; next meeting on August 8.

The Mexican Peso extended its agony and printed losses of more than 0.80% against the Greenback after the preliminary release of the Gross Domestic Product (GDP) for Q2 2024. It was slightly below estimates and trailed the first quarter reading. Hence, traders bought the US Dollar as seen by the USD/MXN trading at 18.79, refreshing seven-week highs after bouncing off daily lows of 18.41.

Mexico’s Instituto Nacional de Estadística Geografia e Informatica, known as INEGI by its Spanish acronym, revealed that GDP rose 0.2% QoQ, below estimates of 0.4% and trailing Q1’s 0.3% increase. Although the economy achieved 11 quarters of expansion, growth has decelerated, raising the chances of an interest rate cut by the Bank of Mexico (Banxico).

Banxico lifted rates as high as 11.25% but cut them to 11.00% in March, laying the ground for additional adjustments. However, the latest inflation data refrained the central bank’s Governing Council from easing policy.

The Mexican central bank's next meeting is on August 8, and economists cited by Reuters noted that GDP data could influence policymakers to lower borrowing costs.