- The Mexican Peso is located while merchants are preparing to reduce the average of 5-Basis amid signs of enlarged cooling and weak economic activity.
- Pancico is expected to reduce 50 basis points where the economy shows signs of fatigue.
- Economic activity is still shrinking despite strong retail sales and improving January.
The Mexican Biso (MXN) decreases against the US dollar (the US dollar) during the North American session on Wednesday after the launch of economic data during the week, highlighting the development of the inflation process as well as the economy that weakens. The US dollar/MXN is trading in 20.08, an increase of 0.20 %.
Traders are preparing for the Banco De Mexico (banxico) monetary decision on Thursday. The central bank is expected to reduce rates by 50 basis points (BPS) from 9.50 % to 9 % due to the development of the inflation process and signs that the economy slows down.
This week, Mexico’s economic schedule revealed that economic activity in January may improve compared to December, but it remained in the shrinking lands for the second month in a row. Meanwhile, inflation data was positive as inflation decreased in the first half in March in both the main and basic readings, an indication of the development of the inflation process.
Other data showed that retail sales in January were strong, as reading and expectations exceeded the previous month, but it was the first strong reading since April 2024, as sales have shrunk over the past eight months in a row.
Looking at the background, more bullish trend in US dollar/MXN. However, if US President Donald Trump exempts the tariffs of Mexico, the economy’s view may improve. Thus, pyseo can strengthen and put pressure down on the strange husband.
Before this week, the Mexico schedule will include a balance in the Bancicpy interest rate. By borders, the American table will contain the issuance of the preferred inflation scale of the Federal Reserve, a basic personal consumption expenses (PCE).
Daily Digest Market Movers: The Mexican Peso is declining before the Pancico meeting
- The CITI Survey Study revealed that most of the private sector economists expect Pancico to reduce rates by 50 basis points. According to the survey, the basic reference rate of Mexico 2025 is expected to end 8 %, a decrease from 8.25 %.
- The USD/MXN survey ended in 20.98, a decrease of 21.00 in the last survey.
- The inflation expectations remained in a 3 % high range, while GDP expected to expand by 0.6 %, a decrease from 0.8 % in the last survey.
- Traders have priced the FBI to reduce policy by 64 basis points (BPS) throughout the year, according to Chicago Trade Council data.
USD/MXN Expectations: Mexican Bizo loses traction as USD/MXN rises after 20.10
The USD/MXN remains biased up. Although it has recovered for two days at 20.16, it decreased to less than 20.10, which paves the way for more negative side. The RSI indicator shows that momentum does not support buyers or sellers, which hints of volatile trading conditions.
However, the first main support is No. 20.00. If the next support will be the simple moving average for 200 days (SMA) in 19.71, followed by a decrease in the September 18 oscillation of 19.06. On the other hand, if the USD/MXN bulls wipe the 20.20 sign, the strange pair will be ready to test SMAS for 100 days and 50 days at 20.22 and 20.38 each, 20.50 areas before.
Common questions between Mexican Peso
The Mexican Bezo (MXN) is the most circulating currency among its peers in Latin America. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even the levels of transfers sent by Mexicans who live abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the proximity process – or the decision of some companies to transfer manufacturing capabilities and supply supply chains near their countries of origin – is a motivation for the Mexican currency as the country is a main manufacturing center in the American continent. Another MXN catalyst is oil prices because Mexico is a major source of commodity.
The main goal of the central bank in Mexico, also known as Pancico, is to maintain inflation at low and stable levels (in or near its 3 % target, the center point in the range of tolerance between 2 % and 4 %). To this end, the bank determines an appropriate level of interest rates. When inflation is very high, BancicPico will try to tame it by raising interest rates, making it more expensive for families and companies to borrow money, thus cooling demand and macroeconomic economy. The highest interest rates are generally positive for Mexican Peso (MXN) because it leads to higher returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken MXN.
The total economy data is a key to assessing the state of the economy and can have an impact on the Mexican PESO (MXN) evaluation. The strong Mexican economy, based on high economic growth, is a decrease in unemployment and high confidence, useful for MXN. It not only attracts more foreign investments, but may also encourage the Bank of Mexico to increase interest rates, especially if this force corresponds to high inflation. However, if economic data is weak, MXN is likely to decrease.
As a currency of the emerging market, the Mexican Biso (MXN) tends to strive during risk periods, or when investors see the wider market risk low and thus yearn to communicate with investments that bear greater risks. On the contrary, MXN tends to be weak in times of turmoil in the market or economic uncertainty where investors tend to sell high -risk assets and flee to the most resigned safe havens.
