• Mexican Peso falls over 0.41% after Mexico's Q1 GDP growth underperforms expectations.
• Stronger-than-expected US Employment Cost Index bolsters US Dollar, diminishing prospect for imminent Fed rate cut.
• Despite quarterly GDP growth exceeding expectations in Mexico, annual figures fail to meet forecasts, contributing to Peso's decline.

The Mexican Peso tumbles more than 0.41% against the US Dollar on Tuesday, following the release of Mexico’s Gross Domestic Product (GDP) figures missing estimates for the first quarter on a yearly basis.

That alongside with a reacceleration of inflation, according to data revealed in the United States (US), weighed on the Mexican currency. The Greenback has recovered some ground though. At the time of writing, the USD/MXN trades at 17.08 after hitting a low of 16.95.

Mexico’s National Statistics Agency (INEGI) revealed that GDP for Q1 2024 grew 1.6% YoY, a slower pace than the 2.4% in the last quarter of 2023 and beneath estimates of 2.1%. However, on a quarterly basis, the country grew 0.2% higher than the previous reading of 0.1% and exceeded the consensus of 0%.

Across the border, the US economic docket was busy, as the Employment Cost Index (ECI) a measure used by the Federal Reserve to assess inflation on wages was higher than expected, decreasing the odds of a rate cut by Fed Chairman Jerome Powell and Co.

Recent data witnessed Consumer Confidence deteriorating in the US, according to April’s data by the Conference Board.

This week, the US economic docket will be busy, though the most significant events will be the releases of the ISM Manufacturing PMI and the Fed’s monetary policy decision on May 1, followed by the Nonfarm Payroll figures on Friday and the ISM Services PMI.