- The Mexican weight remains stable while inflation figures suggest greater relaxation by Banxico.
- Although US payrolls did not reach expectations, a lower unemployment rate drives USD against weight.
- Interest rate forecasts suggest greater relaxation in Mexico, while Fed maintains a cautious perspective by 2025.
The Mexican peso (MXN) reversed its course and depreciated against the dollar on Friday after inflation data in Mexico justified the interest rate cut of 50 basic points by the Bank of Mexico (Banxico) on Thursday. In the United States (USA), employment data were mixed, since payrolls did not reach expectations, but the unemployment rate fell. The USD/MXN is quoted at 20.60, rising 0.86%.
Inflation in Mexico fell in January, exceeding the estimates revealed by the National Institute of Geography and Informatics Statistics (INEGI). The general and underlying inflation remained within the range of 3% or so 1% of Banxico, and improved compared to the last report, opening the door to a greater relaxation by the Mexican Central Bank.
On Thursday, Banxico reduced the costs of loans from 10% to 9.50% and suggested that the rates could lower in the same magnitude in future meetings. Banxico officials added that inflation would converge 3% in the third quarter of 2026.
The USD/MXN pair extended its profits after the publication of the last non -agricultural payroll report of the USA although the figures did not reach expectations, an improvement in the unemployment rate promoted the exotic pair.
In addition, the differential of interest rates between Mexico and the US will be reduced. Banxico is expected to lower the primary reference rate to 8.50%, according to the latest private economist survey of the Central Bank. On the contrary, the Federal Reserve (FED) paused its relaxation cycle and projected two feat cuts in 2025, according to the Summary of Economic Projections (SEP) last December.
What moves the market today: progress in Mexican inflation, weighs on Mexican weight
- The consumer price index (CPI) of Mexico for January increased by 3.53% year -on -year, below 4.21% of the previous month and the estimates of 3.61%. The underlying IPC rose 3.66%year -on -year, compared to 3.65%, but below the provisions of 3.70%.
- The evolution of the disinflation process in Mexico and the economic contraction of the last quarter of -0.6% intertrimestral were the main drivers of the reduction of 50 PBs in the costs of loans by Banxico.
- Banxico’s decision was not unanimous, since subgovernor Jonathan Heath voted for a 25 -page cut. Currently, the Board is divided between four pigeons, and Heath is the only “hawk.”
- Non -agricultural payrolls from the United States in January dropped from 256k to 143K, not reaching the 170K mark. The unemployment rate dropped from 4.1% to 4%.
- Commercial disputes between the US and Mexico are still in the boiling point. Although countries found common land, USD/MXN operators should know that there is a 30 -day break and that tensions could arise throughout February.
- Futures of the Federal Funds of the Monetary Market are discounting a flexibility of 39 basic points (PBS) by the Federal Reserve in 2025.
Technical perspective of the USD/MXN: the Mexican weight is prepared for more losses
The USD/MXN has consolidated within the area of ​​20.30 – 20.70 during the last four days, after the volatile session on Monday due to Trump’s tariffs on Mexico. The torque is still on the rise, with a strong support in the single mobile average (SMA) of 50.57.
If the USD/MXN rises above 20.70, the next resistance would be the daily peak of January 17 in 20.90 before trying 21.00 and the annual maximum of 21.29.
On the contrary, if the USD/MXN falls below the 50 -day SMA, the following support would be the 100 -day SMA in 20.22. Once clear, there is a greater fall, and the torque could challenge 20.00.
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.
