- The Mexican weight remains stable after not exceeding support at 20.30.
- Mixed economic data in Mexico weighed on the Mexican currency.
- Operators expect the Banxico monetary policy meeting and Fed speeches.
The Mexican peso (MXN) registered losses against the US dollar (USD) on Tuesday, but still remains up to week after the president of the United States (USA), Donald Trump, delayed the tariffs to Mexico , after the discussions held with Mexican president Claudia Sheinbaum. The USD/MXN is quoted at 20.47, rising 0.74%
The USD/MXN torque has found a strong support near the area of ​​20.30 despite losing more than 1.30% on Monday. Yesterday, USA and Mexico reached an agreement to pause tariffs within a month, since President Sheinbaum promised to increase border safety to stop drug trafficking and illegal migration.
The investors celebrated the news since the appetite for the risk improved, and the Mexican currency ended strong in Monday’s session.
In addition, Mexico’s economic data revealed that January business confidence improved, although business activity was contracted, according to S&P global. Manufacturing activity was contracted for the seventh consecutive month in January, indicating that the economy is slowing down.
Meanwhile, employment offers in the US fell for the most in 14 months, according to data from the US Department of Labor Federal (Fed) waiting at least until June.
Given the context, a greater increase in the USD/MXN is expected, although the operators must be attentive to the speeches of the FED officials during the rest of the day. Throughout the week, the Bank of Mexico (Banxico) is expected to cut the rates for Thursday.
The uncertainty surrounds the size of the cut, since some officials of the Central Bank had opened the door to a flexibility greater than a percentage quarter.
DIARSTA DIARY OF THE MARKET MOTORS: The Mexican defensive peso while the dollar counterattacks
- The business confidence of Mexico was slightly 52.0 in December to 51.4 in January, the National Institute of Geography and Informatics Statistics (INEGI) revealed. The manufacturing subcomponent grew from 51.4 to 51.7 in the same period.
- The Global S&P manufacturing PMI in January fell from 49.8 to 49.1, showing that manufacturing activity is slowing down.
- Pollyanna de Lima, associate director of Economics in S&P Global Market Intelligence, said: “Mexican manufacturers began 2025 in a weaker position, deepening the retraction mode since the current conditions of demand and a grim perspective led them to search cost savings and protect cash flows. “
- The survey of Banxico private economists showed that Mexico’s economy will grow 1% in 2025, compared to 1.2% in December. Inflation is expected to increase 3.80%to 3.83%, while underlying prices are foreseen at 3.74%, compared to 3.72%.
- Economists estimate that the USD/MXN pair exchange rate will end the year at 20.90, compared to 20.53 in December, and estimate a flexibility of 150 basic points by Banxico.
- The US job and rotation offers survey (Jolts) in December fell from 8,156 million to 7.6 million, below the estimates of 8 million.
- Futures of the Federal Funds of the Monetary market are valuing a flexibility of 48 basic points (PBS) by the Federal Reserve in 2025.
Technical perspective of the USD/MXN: The Mexican weight weakens beyond 20.50 while buyers point to 20.90
The USD/MXN has recovered after reaching a minimum of five days of 20.39 when Trump paused tariffs to Mexico. During the American session, the exchange rate rose above the single mobile average (SMA) of 20.42, opening the door to more increases.
A daily closure above the psychological zone of 20.50 could pave the way to test the previous annual maximum of 20.90. If it exceeds, look for the maximum of the current year at 21.29.
On the contrary, if the vendors push the USD/mxn below 20.30, it could fall to the 100 -day SMA in 20.15, before the figure of 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.
