Analysis of Mexican Peso Market Trends
Mexican Peso Performance
- The Mexican Peso retreated against the USD, trading at 19.24 with a 0.35% gain.
- Last week, the Peso appreciated nearly 4% but weakened due to closed local markets.
Recent Developments
- President AMLO enacted the Judicial reform, effective from Sunday.
- Fed rate cut expectations rose, with a 61% likelihood of a 50 bps cut on Wednesday.
The stock market’s mixed mood on Wall Street influenced the Peso’s performance. In Mexico, economic data on Aggregate Demand and Private Spending for Q2 2024 will be released on Wednesday.
The USD remained weak as investors anticipated the Fed’s interest rate cut. Speculation on the rate cut size increased after hints from Fed whisperer Nick Timiraous.
Daily Digest Market Movers
- USD/MXN driven by market sentiment and Fed rate cut expectations.
- Mexico’s Inflation dropped below 5% in August, raising potential for more easing by Banxico.
- A robust rule of law environment could boost investment, per Bank of Mexico.
- US Retail Sales expected to decline from 1% to 0.2% MoM.
- US Industrial Production forecasted to improve from -0.6% to 0%.
USD/MXN Technical Outlook
The USD/MXN pullback to 19.15 saw buyers pushing it to 19.38, hinting at seller momentum. The RSI nearing neutrality could lead to an upward movement, with resistance levels at 19.50 and 20.00.
On the downside, breaching 19.15 could target the August 23 low of 19.02 and the 50-day SMA at 18.99.
Mexican Peso FAQs
- The MXN value is influenced by the economy, central bank policy, foreign investment, remittances, geopolitical trends, nearshoring, and oil prices.
- Banxico aims to maintain inflation near 3% by adjusting interest rates, impacting MXN valuation.
- Macroeconomic data, like economic growth and unemployment rates, affect MXN’s performance.
- MXN thrives during low-risk periods but weakens in times of market turbulence or uncertainty.