The Mexican Peso Soars Against the US Dollar
- The Mexican Peso gains traction against the US Dollar, driven by an increase in global risk appetite and a weaker Greenback.
- Wall Street Reacts to Trump’s Treasury Secretary Appointment
- INEGI Reports Progress in Mexico’s Disinflation Process
The Mexican Peso is off to a strong start this week against the US Dollar, benefitting from improved risk appetite and a general weakness in the US Dollar. President-elect Donald Trump’s selection of Scott Bessent as Treasury Secretary has been well-received by investors, leading to a positive sentiment in global equities markets. As a result, the USD/MXN pair is trading at 20.30, down by 0.45%.
Wall Street’s Response and Market Trends
Wall Street saw a rally following Trump’s appointment of Bessent, viewed as a market-friendly choice. This has put pressure on the Greenback, with the US Dollar Index (DXY) dropping over 0.40% and falling below the 107.50 mark, partly due to declining US Treasury yields.
INEGI’s Economic Reports
INEGI recently reported progress in Mexico’s disinflation process, moving closer to the 3% inflation target set by the Bank of Mexico (Banxico). However, the third-quarter GDP growth rate decelerated from 2.1% to 1.6% quarter-on-quarter, indicating a slowdown in the economy.
Kimberley Sperrfechter, EM Economist at Capital Economics, mentioned, “The good inflation data raises the possibility of a 50 basis point cut by Banxico in December,” adding that they are currently leaning towards a 25 basis points cut.
Additionally, Banxico announced a current account surplus of $733 million in Q3 for Mexico’s economy.
Upcoming Economic Events
Traders are eagerly awaiting key economic releases this week, including the Conference Board (CB) Consumer Confidence, the Federal Open Market Committee (FOMC) Meeting Minutes, Durable Goods Orders, Initial Jobless Claims, and the Personal Consumption Expenditures (PCE) Price Index.
Notably, market participants are closely monitoring the possibility of a rate cut by the Fed in December, with the CME FedWatch Tool indicating a 56% chance of a 25-basis-point cut.
Daily Digest Market Movers: Mexican Peso Advances
- Bank of Mexico Governor’s readiness to cut interest rates if inflation continues downward.
- Mexico’s Chamber of Deputies’ approval of the dissolution of autonomous bodies affecting the USMCA free trade agreement.
- Decrease in Mexico’s mid-month inflation rate and core inflation.
- Investors estimating Fed easing by the end of 2024.
USD/MXN Technical Outlook: Mexican Peso Appreciates
The USD/MXN uptrend remains, with potential support levels at 20.22, 20.00, and 19.75/82. Resistance levels include 20.50, 20.55, 20.69, and 20.80.
Mexican Peso FAQs
Learn more about the factors influencing the Mexican Peso:
- The impact of the Mexican economy, central bank policy, foreign investment, remittances, and geopolitical trends on the MXN.
- Role of Banxico in maintaining inflation levels and interest rates to support MXN.
- Macroeconomic data’s influence on MXN valuation based on economic strength or weakness.
- MXN behavior as an emerging-market currency during risk-on and risk-off periods.