- The Mexican weight advances while the USD/MXN collapses below 19.90, with a fall of more than 1%.
- The weight ignores the weak industrial production of Mexico and the decrease in consumer confidence that feeds concerns about a recession.
- The feeling of the consumer in the US collapses amid the growing inflation expectations, driven by the next Trump administration tariffs.
The Mexican peso (MXN) recovered against the US dollar (USD) on Friday, ignoring the weakest economic data of what was expected to reveal during the week that suggest that the economy could slow down. A deterioration of consumer’s feeling in the United States (USA) exerted pressure on the dollar, which is ready to finish the week with losses. The USD/MXN is quoted at 19.86, with a fall of more than 1%.
The mood on the market became optimistic, a favorable wind for the currency of emerging markets. Disaddating reports in consumer confidence and industrial production in Mexico paint a gloomy economic panorama, further confirmed by the director of Economic Research of Banco de México (Banxico), Alejandrina Salcedo Cisneros.
She commented that uncertainty is impacting the country’s businesses, hinting at a moderate expansion panorama of regional economies. Banxico estimated an economic contraction in all regions of the country. At the national level, growth decreased by -0.6% in the fourth quarter compared to the previous trimester in seasonally adjusted figures.
In the US, the consumer’s feeling index of the University of Michigan (UOM) recorded a discouraging figure, while inflation expectations pointed to the rise due to the tariffs of President Trump.
The eyes of the operators are put in the Federal Reserve Policy (FED) decision next week. Last Friday, the president of the FED, Jerome Powell, revealed that “market measures of inflation expectations have increased, driven by tariffs.”
Next week, operators will be attentive to retail sales, housing data, Fed monetary policy decisions and economic projections.
Daily summary of market movements: the Mexican peso shoots while the dollar weakens
- The industrial production of Mexico collapses to -2.9% year -on -year, worse than the fall of -2.7% of December, along with a deterioration in consumer confidence suggests that the Mexican weight could be depreciated despite the observed profits that are mainly due to the general weakness of the US dollar.
- The economy in Mexico is slowing dramatically, as private analysts surveyed by Banco de México (Banxico) project. They expect 0.81%growth.
- Banxico is expected to continue relaxing the policy at the March 27 meeting promoted by the evolution of the disinflation process and a stagnant economy.
- On Wednesday, Mexico’s Minister of Finance, Edgar Amador Zamora, said the national economy is expanding but shows signs of deceleration linked to commercial tensions with the US.
- The consumer’s feeling survey at the University of Michigan (UOM) showed that in March, the feeling deteriorated from 64.7 to 57.9, below the 63.1 forecast. Notably, inflation expectations jumped with Americans seeing 12 months inflation increase from 4.3% to 4.9%. For a period of five years, consumers saw prices at 3.9%, above 3.5%.
- The monetary market operators had discounted 67 basic points of relaxation by the Fed towards the end of the year, below 74 a day ago.
- A Reuters survey showed that 70 of 74 economists say that the risk of recession has increased in the US, Canada and Mexico.
- In the operating room, commercial disputes between the US and Mexico are still the center of attention. If countries reach an agreement, you could pave the way for a recovery of the Mexican currency. Otherwise, a greater increase in USD/MXN is expected, since US tariffs could trigger a recession in Mexico.
Technical perspective of the USD/MXN: The Mexican weight shoots while the USD/MXN collapse below 20.00
The USD/MXN finally exceeded the figure of 20.00, reaching a minimum of four months of 19.84 earlier during the North American session. The impulse favors a greater decrease in the torque, as indicated by the relative force index (RSI) that becomes bassist and closes in overall territory. Therefore, the path of less resistance is inclined towards the decline.
The first USD/MXN support would be the 200 -day simple mobile average (SMA) in 19.67. If it is exceeded, the next stop would be the figure of 19.50, before the minimum of 19.06 of September 18. For a bullish resumption, the first level of resistance of the torque is 20.00. A decisive break will expose the 100 -day SMA at 20.35.
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.
