- The Mexican weight ignores the high inflation of the US
- Inflation in the US exceeds 3%, delaying the expectations of cutting fees of the Fed until September.
- The president of the FED, Powell, points out that the restrictive policy will persist while the underlying prices remain strong.
- The MXN wins despite the lack of local economic data; Conversations about steel tariffs between Mexico and the US Ahead.
The Mexican peso (MXN) extended its earnings against the US dollar (USD) for the second consecutive day, without being flimpy due to the increase in inflation in the United States (USA), which prevents the Federal Reserve (Fed) from flexible Politics. The USD/MXN pair is quoted at 20.51, with a fall of 0.14%.
The Consumer Price Index (CPI) in January exceeded the 3% year -on -year threshold US labor (BLS). Underlying prices also increased, which justifies the Fed decision to maintain rates at the January meeting.
After the publication of the US CPI, the SWAPS market speculated that the Fed would not cut the rates until the September meeting. The Future contract of the federal fund rate in December shows that the market is valuing a flexibility of 29.5 basic points (PB) towards the end of the year.
Meanwhile, the president of the FED, Jerome Powell, testified to the US House of Representatives of the US. Powell acknowledged that the work on inflation was not finished and wanted to maintain the restrictive policy.
The economic agenda is still absent in Mexico, however, President Claudia Sheinbaum said that Mexico and the US will discuss steel tariffs at the end of this week. In the US, the calendar will include the publication of the production price index (PPI), the initial applications of unemployment subsidy, retail sales and industrial production.
What moves the market today: the Mexican weight ignores US inflation data.
- The economic agenda of Mexico remains absent, however, the deterioration in the automotive industry and the industrial production figures worse than expected suggest that the economy is in the worst form of expected.
- This and the commercial rhetoric of the president of the United States, Donald Trump, on Mexico would be winds against the Mexican currency.
- The consumer price index (CPI) exceeded 3% year -on -year for the first time since June 2024, with monthly figures (MOM) increasing 0.5%, from 0.4% of December.
- Excluding volatile elements, the underlying CPI increased by 3.3%year -on -year from 3.2%, and monthly, 0.4%expanded, an increase from the previous 0.2%and exceeding the estimated 0.3%.
- Commercial disputes between the US and Mexico are still in the boiling point. Although countries found a common land previously, USD/MXN operators should know that there is a 30 -day break and that tensions could arise towards the end of February.
- Futures of the Federal Funds of the Monetary market are valuing a flexibility of 28.5 basic points (PB) by the Fed in 2025.
Technical Perspective of the USD/MXN: The Mexican weight is consolidated, waiting for a new catalyst
The USD/MXN has fallen towards the simple mobile average (SMA) of 50.46, which, if it breaks, could pave the way for a setback. The price action suggests that the exotic pair has established itself near the area of ​​20.40 – 20.68 during the last five days, with the impulse slightly inclined downward since the relative force index (RSI) became bassist.
A fall of the USD/MXN below 20.40 would favor a 100 -day SMA test in 20.22, exposing the critical figure of 20.00. If it exceeds, the exotic pair could point around 19.50 and look for a 200 -day SMA test in 19.26.
Meanwhile, if buyers exceed 20.68, the next resistance would be the maximum of January 17 in 20.90. Once surpassed, the next stop would be 21.00, followed by the annual maximum (YTD) in 21.29.
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 policy of the Central Bank of the country, the amount of foreign investment in the country and even the 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 currency Mexican, 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 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.
