- Mexican Peso is waiting for the decision of the US Federal Reserve, stable in vigilant markets.
- Mexico’s labor market is contrary to American tariff concerns, putting subtle pressure on peso
- Despite the potential American trade challenges, the deputy governor of Bannsico indicated.
Mexican Peso (MXN) remains under control against the US Dollar (USD) during the North American season as investors wait for the United States (US) Federal Reserve (Fed) monetary policy decision. As a result, the price action is forced, as observed by USD/MXN trading at 20.55, which is minimal 0.06% and virtually unchanged.
Mexico data showed that the December unemployment rate was submerged, indicating the strength of the labor market. Recently, Omar Mejia Castlezo, Deputy Governor of Banco D. Mexico (Bancico), said on the podcast of Banorte that Bancico has sufficient margin to do “the process of calibration” in the upcoming monetary policy meetings. He indicated that the central bank would probably continue to reduce the policy.
Asked about the challenges from Trump’s trade policies in the US, Mejia said that in Mexico, “solid macro-economic basic things were.”
Despite this, the Mexican currency has been pressurized during the week, on Monday, depreciation of more than 1.89% against Greenback on Monday, President Trump’s trade policy due to the threat to Colombia. At the same time, the White House reiterated that according to the Press Secretary Karolin Levit, 25% tariffs for Mexico would be implemented on 1 February.
About this, David A, an economist of Julius Bayer. Meer said: “Our view is that these dangers aim to pressurize Mexico and Canada on drugs and immigration issues, as well as to reopen USMCA talks before 2026.”
If the danger is physical, Meer warned of potential economic results. He said that Mexican exports will decrease and remittance would take a hit, which opens the door for further depreciation of Mexican Peso.
In addition, the Economic Dock of Mexico will have the facility to release the initial Q4 2024 GDP (GDP) data.
Daily Digest Market Movers: Hovers near 20.50 after Mexican Peso Jobs Report
- The Instituteo National Day Estadistica Gographer E Informatica (INEGI) revealed that Mexico’s unemployment rate in December was 2.4%, below 2.6% in November. The seasonally adjusted figures were 2.6%.
- According to Reuters, Mexico President Claudia Shinbam said that he does not believe that the United States would impose tariffs on February. 1. “
- A Reuters Pole revealed that private economists have estimated the GDP of Mexico in an expansion of Q4 -0.2% QOQ. On an annual basis, the GDP is to be reduced from 1.6% to 1.2%.
- City revealed the survey of its expectations, in which Mexican private economists revised the GDP figures up to 1%down to 2025. In the headline data, inflation is at 3.91%, and core prices are estimated at 3.68%. Both figures are within 3% plus or minus 1% of Bancico.
- The USD/MXN exchange rate will end at around 20.95 in 2025.
- Banansico is expected to reduce the 25-base points (BPS) from 10.00% to 9.75%, although some analysts expect a 50-BPS cut at the 6 February meeting.
- According to CME Fedwatch Tool Data, the Money Market Futures cost 50 bps for the fed rate cut in 2025.
USD/MXN Technical Outlook: Mexican falls as PESO USD/MXN to 20.50
The USD/MXN consolidates near the 20.50 figures for the second straight day, with traders, the year-by-year (YTD) of 20.90 (YTD) is reluctant to push the prices above high. Since November, the foreign pair remains within the range of 20.20–20.90, 50 and 100-day simple moving averages (SMAS), each in each 20.38 and 20.07.
For a rapid continuity, buyers have to clean the YTD peak and 21.00 figures, which can open the door to test 8 March 2022, daily 21.46, followed by 22.00 psychological levels.
On the other hand, if the sellers push the prices below the 100-day SMA, the next support would be 20.00, followed by the 18 October 2024 swing 19.64.
Mexican peso FAQ
Mexican Peso (MXN) is the most trading currency among its Latin American peers. Its value is broadly determined by the performance of the Mexican economy, the policy of the central bank of the country, the volume of foreign investment in the country and even the level of remittances sent by the Mexico residents, which live abroad, especially From the United States. Geophysical trends can also move MXN: for example, some firms decide by some firms to transfer manufacturing capacity and supply chains close to their home countries – or some firms also to some firms To take as a catalyst is seen because the country is considered. Major Manufacturing Center in the US continent. Another catalyst for MXN is oil prices as Mexico is a major exporter of commodity.
The main objective of the Central Bank of Mexico, also known as Bannico, maintains inflation at low and stable levels (close or about its target of 3%, in a tolerance band between 2%and 4% Middle point). To end this, the bank determines a reasonable level of interest rates. When inflation is very high, Banusico will try to increase the interest rates to control it, making it more expensive to borrow money for homes and businesses, thus the demand for cooling and cooling the overall economy. High interest rates for Mexican peso (MXN) are usually positive because they cause high yields, making the country a more attractive place for investors. Conversely, the low interest rate weakens MXN.
Macroeconomic data releases are important for assessing the status of the economy and can affect the Mexican peso (MXN) evaluation. A strong Mexican economy is good for MXN based on high economic growth, low unemployment and high confidence. Not only does it attract more foreign investment, but it can encourage the Bank of Mexico to increase interest rates, especially if this strength comes with elevated inflation. However, if economic data is weak, MXN is likely to depreciate depreciation.
As an emerging market currency, the Mexican Peso (MXN) goes to try during the risk-period period, or when investors feel that broad market risks are low and thus to engage with those investments Are eager to take a high risk. In contrast, MXN weakens in the time of market disturbance or economic uncertainty as investors do to sell high-risk property and escape for more safe havens.
