- The USD/MXN falls at least ten days at 18.84.
- The US dollar sinks at least three years due to fears that the Fed loses its independence with Trump.
- All eyes are put in the decision of Banxico’s interest rates later in the day.
- The good data of requests for durable goods and unemployment subsidy requests in the US provide a slight relief to the dollar despite the greatest contraction of GDP.
The USD/MXN records losses per fourth consecutive day this Thursday, presenting a progressive continuation of its setback since last Monday. The pair has fallen at European noon to 18.84, its lowest level since June 16. At the time of writing, the dollar loses 0.32% compared to Mexican peso in 18.86 ..
The US dollar sinks at least 2022 due to the possibility that the Fed loses its independence with Trump
The US dollar index (DXY) has forth with force on Thursday, precipitating to the 97.00 points in the European morning, its lowest level since March 2022. The main motive of the decrease has been the information published by the Wall Street Journal, which suggested that Donald Trump was considering announcing the name of the Jerome Powell substitute in front of the Federal Reserve in September or October. This movement would represent a threat to the independence of the Fed, since the US president will presumably choose someone favorable to the cuts of fees. In addition, the premature announcement would be seen as a pressure signal before Powell’s exit, since his mandate ends in May 2026.
The United States has published several relevant data in the pre-opening of Wall Street, whose results have given a slight impulse to the dollar index, which now moves around 97.24 although it remains very negative in the day.
Two data have favored this little rebound of the dollar. First, the Petitions of durable goods, which rose 16.4% in Mayits greatest increase since 2014. The indicator has folded market expectations, which provided for an 8.5% increase. Secondly, weekly requests for unemployment subsidy fell to 236,000 Last week since the previous 246,000, improving the forecasts of 245,000. The negative point has come from American Gross Domestic Product (GDP), which has contracted 0.5% in the first quarter of the yearexpanding the contraction of 0.2% expected by consensus.
Banxico could announce a 50 -point rate cut
The focus of the USD/MXN operators now turns Banxico, who will announce at 19.00 GMT his decision on interest rates. Although a 50 basic points are expected up to 8%, several dissident voices within the Mexican Central Bank could cause a smaller reduction, in which case the weight could be seen with more force, reaching new maximums of 2025.
The subgovernor of the Central Bank, Jonathan Heath, recently declared Reuters that “although I am something skeptical that inflation behaves as anticipates the official projection, supports a more cautious and prudent approach until inflation converges towards our 3%goal.”
Before the announcement of Banxico, Mexico has published the Commercial Balance of May, which has reported a commercial surplus of 1,029 million dollars, exceeding the +37 million expected by the market after a deficit of 88 million dollars was seen in April.
USD/MXN Price levels
The relative force index (RSI) points down in short, medium and long term graphics, pointing out a generalized bearish bias in the torque.
The main support appears in 18.82, land of 2025 and the last 10 months reached in June. A break below this level could cause a setback around 18.60, where are the soils of August.
Upwards, the initial resistance is in the area of ​​19.05/19.03, where the mobile socks of 100 converge in one and four hours graphics. Above, the region of 19.35/19.45, where are the maximum of June and late May, will contain greater advances.
Mexican weight FAQS
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.
