- The Mexican weight is sharply strengthened, overcoming the 19.50 support with the view in 19.00 in the middle of a risk impulse.
- The US -USA iPC data does not meet expectations; The underlying inflation remains stable, weakening the dollar.
- The reduction of 90 -day tariffs between the US and China raises the global feeling; The S&P 500 records a gain of more than 1%.
The Mexican weight (MXN) shot at a new annual maximum (YTD) against the US dollar (USD) after a weaker inflation report of what was expected in the United States (USA) weighs on the dollar. In addition, an improvement in appetite due to risk increased the attractiveness of the currency of emerging markets (EM). At the time of writing, the USD/MXN is quoted at 19.41, with a fall of more than 1%.
Wall Street closed Tuesday in Green, erasing losses of the stock market for the year while market participants evaluated the decision of the US president, Donald Trump, to reduce tariffs applied to Chinese products. The 90 -day truce and the reduction of tariffs agreed between the US and China improved the appetite for risk, as evidenced by the rise of the S&P 500 of more than 1%.
Consequently, risk -sensitive currencies in the currency space, such as weight, expanded their profits as the USD/MXN exceeded the crucial level of psychological support of 19.50 before sliding towards the figure of 19.00.
The Mexican peso capitalizes the weakness of the US dollar after the US CPI failure.
In the US, the general inflation of April in interannual terms was in line with the forecasts. The so -called underlying inflation, which excludes volatile elements, remained unchanged.
Daily summary of market movements: the Mexican peso advances while the US dollar falls
- The operators are waiting for the Banxico monetary policy decision on May 15, in which the Mexican institution is expected to reduce the fees for seventh consecutive meeting.
- It is expected that the Bank of Mexico – also known as Banxico – reduces interest rates in 50 basic points (PBS), according to a survey revealed by Reuters. This would be the seventh consecutive meeting in which Banxico cuts rates.
- Recently, Mexico’s Minister of Economy, Marcelo Ebrard, announced that the review of the T-MEC will begin in the second half of 2025.
- On Monday, the industrial production of Mexico slowed in March, as revealed by the National Institute of Statistics, Geography and Informatics (INEGI). This, together with GDP figures that barely triggered a technical recession, will probably undermine the Mexican currency.
- Recent data revealed that Mexico’s economy is experiencing a slowdown, while Mexico’s inflation data for April, which expanded above expectations both in general and underlying figures, would not prevent Banxico from prolonging their relaxation cycle.
- It is important to note that investors reduced their bets that the Federal Reserve (FED) could cut rates only twice instead of three, according to data from the Chicago Commerce Board (CBOT). The Futuro Funds Contract for December 2025 shows that market participants expect 57 basic relaxation points.
- Therefore, divergence in monetary policy between the FED and Banxico could add pressure on the weight and push the highest USD/mxn exchange rate.
Technical perspective of the USD/MXN: The Mexican weight advances while the USD/MXN falls below the 20 -day SMA
The USD/MXN has fallen to a new annual minimum (YTD) of 19.41, with the torque keeping with bassist bias after achieving a lower series of maximum and minimum. In addition, prices are below the simple mobile average (SMA) of 20 days in 19.58. A daily closure below 19.50 could aggravate a proof of the figure of 19.00. In case of more weakness, the following objective would be the minimum oscillation of August 19, 2024 of 18.59.
On the contrary, if the USD/MXN goes beyond the 19.50 area and reaches a maximum of three days of 19.66, surpassing the SMA of 20 days before going back a bit.
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.
