- The Mexican weight extends its profits, while US data passes to the background; Trump tariffs raise new risks.
- The US retail sales exceed expectations, but manufacturing activity in New York collapse, keeping the US dollar under pressure.
- The OECD warns that Trump’s tariffs could trigger a recession in Mexico, since economic growth forecasts are maintained well below the government’s objectives.
The Mexican peso extended its profits against the US dollar for the fourth consecutive negotiation day, since the Mexican financial markets remained closed due to a national holiday. The United States data (USA) were overshadowed by an “unexpected” optimism in the financial market, since most American stock market rates recovered. The USD/MXN is quoted at 19.87, with a fall of 0.20%.
Wall Street operated with modest profits on Monday. After a decent February sales report, the US dollar remains stable, while the activity collapsed in the Empire State Manufacturing Index of the New York Fed. All this happened while the Mexican economic agenda remains absent, with the operators waiting for the publication of the aggregate demand data and private spending on March 19 and 20, respectively.
Meanwhile, the Organization for Economic Cooperation and Development (OECD) said that the tariffs of US President Donald Trump about Mexican products could boost a recession in Mexico, along with an economic slowdown in the US.
Private economists surveyed by the Bank of Mexico in February revealed that they expect the economy to grow at a rate of 0.81%. However, the discouraging industrial production figures last Friday and a deterioration in consumer confidence will probably weigh on the economy, which is expected to reach the forecasts of the Minister of Finance above the 2%threshold.
Daily summary of market movements: the Mexican weight is not allowed to be affected by the economic projections of the OECD
- 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.
- Last Wednesday, Mexican finance minister Edgar Amador Zamora said the national economy is expanding, but shows signs of deceleration linked to commercial tensions with the US.
- The OCDE updates its forecasts, which include 25% tariffs applied to most goods from April. According to the OECD, it is projected that the US economy grows 2.2% in 2025 and 1.6% in 2026.
- The OECD projects that Mexico’s economy will be severely impacted, contracting -1.3% in 2025 and -0.6% next year.
- The US retail sales in February increased an intermensual 0.2%, below estimates of 0.6%, and improved compared to the fall of -1.2% of January.
- The New York Fed showed that the manufacturing activity fell from 5.7 to -20, with the prices of inputs increasing to its highest level in more than two years.
- The monetary market has discounted 64 basic relaxation points by the Fed in 2025, which has led to the yields of the US Treasury bonds to fall together with the US currency.
- Commercial tensions between the US and Mexico remain the focus, with the perspective of Mexican weight depending on negotiations. A commercial agreement could support a recovery of the currency, relieving economic uncertainty. However, higher tariffs and USD/MXN could continue to increase, since protectionist policies could stop Mexico’s economic growth, which could lead to a recession.
Technical perspective of the USD/MXN: The Mexican weight rises while the USD/MXN falls below 20.00
The USD/MXN is maintained below the figure of 20.00, which keeps the lowest cash seals. However, if they will return to the 2024 levels, they must exceed the simple mobile average (SMA) of 200 days in 19.65. In that case, the following key support levels would be 19.50, 19.00 and the minimum of August 20, 2024 in 18.64.
Otherwise, if the USD/MXN recovers above 20.00, this would clear the way to try the 100 -day SMA in 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.
