In January, Mexico’s 12-month inflation rate was recorded at 3.79%, slightly below the expected rate of 3.82%. This marks a notable performance in managing consumer prices amid global economic pressures.
Across the financial markets, the USD/CAD slipped below 1.3600 due to a weaker US Dollar and steady oil prices. The Dow Jones Industrial Average saw recovery from early losses despite a software sector sell-off impacting the broader market sentiments.
European Economy Steady
The European economy has shown steady growth, with surveys revealing a two-speed economy scenario. The Euro climbed to two-week highs beyond 1.1900, fuelled by a subdued US Dollar and anticipation of upcoming employment data.
In commodity markets, gold is trading near the $5,000 mark, supported by continued purchasing from the People’s Bank of China. Meanwhile, Bitcoin stabilised around $70,000 following a recent low of $60,000, reflecting significant market movements in the cryptocurrency sphere.
The equities and forex markets are being closely watched as observers keep an eye on upcoming US data, which could influence global market trends in the near future.
Inflationary Developments in Mexico
The latest inflation print for Mexico, coming in at 3.79%, is a notable development for us. This figure, falling just below expectations, suggests that the high interest rates Banxico maintained throughout 2025 may finally be taming price pressures. We should therefore consider positioning for a potential dovish shift from the central bank in its upcoming meetings, as this disinflationary trend gives them room to cut.
We are seeing continued weakness in the US Dollar, a theme that has carried over from the final quarter of 2025. Recent data, including the January jobs report, has reinforced the view that the Fed may soften its stance, pushing the DXY index below the key 100 level last week. This environment favors long positions in currencies like the Euro and Sterling, so using call options on EUR/USD and GBP/USD to capture further upside seems prudent.
Gold holding steady around the $5,000 mark is directly tied to the weakening dollar and shifting Fed expectations. Data from the World Gold Council for Q4 2025 confirmed that central bank buying, especially from the PBoC, reached record levels, providing a strong fundamental support for prices. Given the historical inverse correlation, any further dollar softness should be viewed as a bullish signal for gold, making long futures positions or call spreads attractive strategies.
In the crypto space, we are observing a clear divergence, with Bitcoin holding near $70,000 while Ethereum struggles at the $2,000 support level. Recent exchange data shows that while institutional interest in Bitcoin derivatives remains robust, open interest in Ethereum futures has declined, reflecting the mentioned weak retail sentiment. This suggests a potential pairs trading opportunity, going long Bitcoin against a short position in Ethereum to capitalize on this performance gap.
