- The Mexican weight can be seen while the USD/MXN falls to 19.47 after disappointing feeling data in the US.
- Banxico cuts the reference rate at 50 basic points, but the weight remains firm while US data affects the strength of the dollar.
- The Michigan University Survey shows that inflation expectations are increasing and the feeling of the consumer by a minimum of several years.
- The operators now discount 51 basic relaxation points of the Fed by the end of the year; The looks focus on the GDP of Mexico and the US PMIs next week.
The Mexican peso (MXN) erases its previous losses against the US dollar (USD) on Friday and is ready to end the week with profits. A day ago, the Bank of Mexico (Banxico) reduced the main reference rate, although it failed to affect the Mexican currency, which has gained impulse after the weak economic data of the US at the time of writing, the USD/MXN quotes at 19.47, with a fall of 0.09%.
Banxico reduces rates, looking towards additional relaxation; The feeling of the consumer in the US is deteriorated
On Thursday, Banxico unanimously decided to reduce interest rates in 50 basic points (PBS) by third consecutive meeting in 2025, and has opened the door to additional cuts from the same magnitude. Although the Mexican institution reduced the 400 PBS rates differential with the US Treasury bonds, a deterioration in the feeling of the consumer in the US brought down the USD/MXN exchange rate.
The University of Michigan (UOM) revealed that American consumers are becoming more and more pessimistic about the current state of the economy, as indicated by the May survey. In addition, inflation expectations had increased well above the objective of 2% of the Fed, which could press the US Central Bank, which has become cautious when evaluating the impact of the controversial commercial policies of the Trump administration on the economy.
Other US economic data revealed above showed that the beginnings of housing increased while construction permits fell. Meanwhile, the US Department of Commerce reported that import prices increased in April, exceeding estimates.
The increase in import prices, together with the expectations of American prices American households, could suggest that Fed would maintain interest rates without changes. However, market participants think otherwise and have increased their bets for greater relaxation by the Fed, projecting 51 pbs cuts towards the end of the year.
For next week, USD/MXN operators will be attentive to retail sales of Mexico and economic growth data. In the US, the calendar will include Fed speakers, as well as preliminary PMIs and housing data, which will be closely followed.
Daily movements of the Mexican peso market: increases despite the DOVESH posture of Banxico in the United States weak data.
- Banxico left Mexico’s main reference rate at 8.50%. The Board awaits an additional calibration of monetary policy, anticipating that the current inflationary environment would allow it to continue the relaxation cycle. The Central Bank projects that general inflation will converge in the 3% objective for the third quarter of 2026.
- Banxico officials added that changes in the economic policy of the US administration have added uncertainty to projections.
- Goldman Sachs analysts, Finamex, Skandia, Pantheon Macroeconomics and Valmex project that the main reference rate of Mexico will be in a range of around 7.25% to 7.75% by the end of 2025. The five economists surveyed revealed that they expect 50 PBs of relaxation for the June 26 meeting, according to the economist.
- The feeling of the consumer of the University of Michigan fell to 50.8 in May, its lowest level since July 2022, failing in the forecast of 53.8 and going down from April 52.2, reflecting an increase in consumer pessimism.
- Import prices increased an intermensual 0.1% in April, exceeding both expectations and the drop in -0.4% of March, suggesting moderate upward pressure on input costs.
- The Future Fund Fund Contract of December 2025 shows that market players expect 5 basic relaxation points.
Technical perspective of the USD/MXN: The Mexican weight goes up while the USD/MXN is prepared to close the day below 19.50
The USD/MXN was consolidated on Friday, although it seems to be prepared to extend its losses as the week concludes. The impulse is inclined downward, since the relative force index (RSI) is below the 50’s neutral line, indicating a bearish trend despite being slightly flat.
That said, the first support is the minimum of the year to date (YTD) of 19.29, before the figure of 19.00. On the other hand, if the USD/MXN rises above 19.50, the next resistance would be the simple mobile average (SMA) of 20 days in 19.92, 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 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.
