- Mexican peso set at 0.89% of weekly profit, because economic resistance surprises markets.
- Comments of the Trump tariff cause variability, but the risk of appetite increases the emerging market currencies.
- Traders are preparing to issue GDP in Q1 next week to assess the risk of recession.
The Mexican peso has expanded its profits in relation to the American dollar on the second day in a row, ready to finish the week with profits of 0.89%, sponsored by improving the appetite to risk and better expected economic data of Mexico. At the time of writing, USD/MXN trades at 19.52, which is a 0.32%decrease.
Wall Street ended his profits during the Friday session, despite the fact that US President Donald Trump issued contradictory comments on China. Night news for American traders revealed Beijing’s readiness to reduce tariffs to US products. Despite this, Trump said that he would not lower the tariffs, unless “they give us something significant.”
The Instituto Nacional de Estadisticla Geography E Informatica (Inegi) revealed that the Mexican economy increased in February, contrary to forecasts, which expected moderate expansion.
Meanwhile, in the United States, the University of Michigan (UOM) consumer mood indicator has deteriorated violently, publishing the fourth lowest reading since the tardy seventies, which indicates that the Americans took doubts about economic perspectives.
That is why USD/MXN has surpassed the lower data Goodish Mexico. However, next week, Inegi will release the gross domestic product growth rate (GDP) for the first quarter of 2025. Negative reading will confirm that the economy is in technical recession.
Daily Digest Market Movers: Mexican peso appreciated during the week despite Banxio’s pigeons
- The discrepancy between Banxico and Fed favors further advantages in USD/MXN. The Banxico management board has expressed the decision to further alleviate the policy. And vice versa, the Fed is considered cautious because some officials have shown concerns about the reaction of inflation stimulated with tariffs.
- In February, the economic activity of Mexico was expanded by 1% MOM, above forecasts for an boost of 0.6%. Every year, activity dropped from 0% to -0.7%, better than expected.
- Economic data disclosed during the week were witness inflation in the first half of April, revealed Inegi. Retail sales in February were lower than expected, showing a continuous economic slowdown.
- Deputy Governor of Banx, Omar Mejia Castelazo, revealed that the economy has been slowing down from 4,2023, he said in Washington.
- Examination of Citi Mexico expectations shows that economists expect Banxico to lower the rate by 50 base points at the May meeting. Throughout the year they design the main reference rate, which ends almost 7.75%.
- As for the USD/MXN exchange rate, private analysts see an exotic pair finished at 20.93, compared to 20.90. It is expected that inflation in 2025 will finish 3.78% with basic numbers at the level of 3.80%, mainly aligned with the previous survey.
- Mexico’s economy is expected to boost by 0.2% in 2025, below 0.3% of the earlier study.
USD/MXN Technical perspectives: Mexican peso remains stubborn, like USD/MXN remains below the key technical level
The price action suggests that USD/MXN is bear, and can continue its inheritance trend when it registers daily close below 19.50. In this result, the next support would have a low level 23 of 19.46, current year on year (YTD), followed by the psychological number 19.00.
If the buyers want to lower prices, they must recover the 200-day SMA to 19.93 and then 20.00. The violation of the latter will reveal the fugitive of April 14 and 50-day SMA near 20.25-20.29 before testing the 100-day SMA to 20.33.
Mexican PESO questions
The Mexican peso (MXN) is the most traded currency among its peers from Latin America. Its value depends widely by the results of the Mexican economy, the policy of the Central Bank of the Country, the amount of foreign investment in this country, and even levels of monetary messages sent by Mexicans living abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the newcombating process – or the decision of some companies to transfer production capacity and supply chains closer to their family countries – is also seen as a catalyst of the Mexican currency, because the country is considered a key production hub on the American continent. Oil prices are the next MXN catalyst, because Mexico is a key exporter of the goods.
The main goal of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in order or 3%similar to the purpose, the middle point in tolerance bands from 2%to 4%). For this purpose, the bank sets an appropriate level of interest rates. When the inflation is too high, Banxico will try to tame it by collecting interest rates, which makes it more pricey for households and companies to borrow money, and thus cooling demand and general economy. Higher interest rates are generally positive for the Mexican peso (MXN), because they lead to higher crops, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken MXN.
The release of macroeconomic data is crucial for the assessment of the state of the economy and may affect the Mexican valuation (MXN). A mighty Mexican economy, based on high economic growth, low unemployment and high trust, is good for MXN. It not only attracts more foreign investment, but can encourage Bank Mexico (Banxico) to boost interest rates, especially if this force connects with increased inflation. However, if economic data is tender, MXN probably absorbs.
As a currency on the emerging market, Mexican peso (MXN) strives to strive during risk periods or when investors see that wider market risk is low, and therefore willingly engage in investments that have more risk. And vice versa, MXN tends to weaken during market turbulence or economic uncertainty, because investors usually sell assets with a higher risk and resort to more stable sheltered time.
