- The Mexican peso suffers while the status of safe refuge of the US dollar keeps USD/MXN supported about 19.50.
- Mexico surprises with growth in the Q1, dodging the recession while the US economy contracts sharply.
- The weak US manufacturing and unemployment applications increase recession fears, raising demand for the dollar.
The Mexican peso recorded slight losses against the US dollar on Thursday after economic data in the United States (USA) suggested a deceleration in manufacturing and cooling in the labor market. The USD/MXN quote 19.58 after reaching a daily minimum of 19.57.
The mood of the market has improved since US commercial news shows some progress in some Asian countries. Although China does not include, rumors that Washington contacted Beijing maintained high investors for an agreement between the two countries.
Wednesday’s data revealed that Mexico’s economy grew, surprising most analysts who expected a contraction and technical recession. In the US, the first quarter of 2025 contracted, mainly supported by an import increase before the effect of tariffs proposed by the Trump administration.
Although this was positive for weight, the USD/MXN seems to have found its stability, playing bottom near the 19.50 area after having fallen below the figure of 20.00 since mid -April.
The US economic data revealed on Thursday indicated that the probabilities of a recession had increased. The US labor market is cooling as initial unemployment applications exceeded estimates. At the same time, business activity in manufacturing has fallen, according to the ISM manufacturing PMI.
Although the divergence in economic growth favored weight, other US data caused an escape towards the status of secure refuge of the dollar. In the following week, the USD/MXN operators are attentive to the publication of non -agricultural payroll figures in April.
Daily summary of market movements: the Mexican weight remains stable in the weak data of the USA.
- The Gross Domestic Product (GDP) of Mexico in Q1 2025 grew by 0.2% compared to the previous quarter, above 0% forecasts and improving after a contraction of -0.6% in Q4 2024.
- The economic data revealed on Monday showed that the commercial balance presented a surplus and that the labor market conditions remain solid, since the unemployment rate decreased in March compared to February.
- In the US, the economy contracted since GDP was -0.3% in Q1 2025, failing in the expectations of an expansion of 0.4% and marking a strong deceleration with respect to the growth of 2.4% of Q4 2024, according to the Department of Commerce.
- The manufacturing PMI of the Supply Management Institute (ISM) was higher than estimates of 48 and stood at 48.7, below the reading of March 49.
- Initial unemployment applications for the week that ended on April 26 increased by 241K, much more than the 224K expected and above 223K revealed a week ago.
Technical perspective of the USD/MXN: The Mexican weight remains bullish while the USD/MXN is maintained below the 200 -day SMA
The USD/MXN has a bearish trend, although it seems to have touched the bottom near the range of 19.46-19.50 during the last two weeks. The reason behind this is that the relative force index (RSI), which remains close to level 30, stabilizes, indicating that sellers lack the force to push the exotic couple down.
If the USD/MXN falls below the minimum of the year to date (YTD), the first support would be the 19.46 mark; Once surpassed, the 19.00 figure would follow. A rupture of this last would expose the maximum of June 28, which became support in 18.59.
On the contrary, if the USD/MXN recovers above the 20 -day SMA in 19.88 and the 200 -day SMA about 19.97, the torus would be prepared to challenge the figure of 20.00. The 50 -day SMA is found below 20.12.
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.
