- The USD/MXN depreciates within a narrow range between 18.84 and 18.72.
- The US dollar maintains yesterday’s rise in front of most of its counterparts but not against Mexican peso.
- The production prices of the United States were moderated more than expected in June.
The USD/MXN oscillates this Wednesday in a narrow range delimited by a daily maximum of 18.84 and a minimum of 18.72. At the time of writing, the balance is tilted down, with the torque losing 0.45% in 18.73.
The production prices of the United States are moderate in June
The USD/MXN has retreated in the last hour, with the dollar moderating against the Mexican peso after the data of the United States Production Price Index (IPP) for the month of June. The indicator grew by 2.3% per year, below 2.6% of April and 2.5% expected, while stagnating in the monthly reading, improving the increase of 0.2% planned. Excluding food and energy, the IPP increased 2.6% compared to the previous 3% and the estimated 2.7%.
On the other hand, Mexico President Claudia Sheinbaum met yesterday with the country’s business sector to try to advance with the Mexico Plan, which aims to increase investment and accelerate the economy. This meeting came after Donald Trump imposed 30% tariffs on Mexican imports and that this week has activated a 17% rate to tomatoes from Mexico. In this regard, Sheimbaum said yesterday that the tomatoes will continue to export, since the fruit has no substitute in the USA. The president also assured that her government will take concrete actions if they do not reach an agreement to reduce all tariffs before August 1.
USD/MXN Price levels
The 14 -day relative force (RSI) index is below 50 in short and long -term graphics, and is turning down at mid -term, which suggests that the USD/MXN will yield more land in the next few hours.
Downward, a mobile average breakdown of 100 periods in one -hour graph at 18.71 will point towards the support located at a minimum of one year reached on July 9 in 18.55. Below, the torque could extend the fall around 18.42, floor of August 2024.
Upwards, a rupture of the maximum of July in 18.84 is necessary to extend the progress towards the region of 19.00. Once above, the main resistance will appear in 19.35, a ceiling of June 23.
Mexican peso – frequent questions
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. 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 remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
