- The USD/MXN records losses on Friday.
- The US dollar sinks at least three years after China’s announcement to raise tariffs to the US to 125%.
- The US production prices soften more than expected in March, while Michigan’s consumer confidence worsens forecasts.
The USD/MXN has begun the day rising to a maximum of two days in 20.62 but after European noon has fallen to a minimum daily in 20.29. At the time of writing, the pair quotes about 20.40, losing 0.78% in what we have been working on.
The US dollar sinks with the tariff escalation between China and the US.
The US dollar measured by its DXY index has collapsed this Friday at least three years at 99.02. There are several reasons that have taken the green ticket to this ground.
First, the dollar has plummeted after China’s announcement to raise their tariffs to US products at 125% On Friday morning. The decision has been made as retaliation to the increase in rates to China to 145% by Donald Trump.
Secondly, US production prices were moderated more than expected in March, placing in 2.7% per year in the general reading, below the previous 3.2% and of 3.3% planned. The underlying index was moderated to 3.3% compared to 3.5% in February, below the estimated 3.6%. The softening of production prices together with the moderation of consumer prices published yesterday could tip the Fed in favor of an interest rate cut soon than expected, which weighs on the USD.
Finally, the index of feeling of the consumer of the University of Michigan has fallen 6.2 points in the preliminary reading of April, standing at 50.8 from March 57, its lowest level since June 2022.
The industrial production of Mexico improves in February
Mexico has positively received its industrial production figuressince it has risen a 2.5% monthly in February after falling 0.4% in January. The data has significantly improved market expectation, which expected an increase of 0.1%. This is the biggest rise seen by the indicator since 2020.
Yesterday, however, Donald Trump alerted Mexican operators after publishing in the Truth social network that could upload tariffs to Mexico and impose sanctions if he does not give Texas the 1.3 million water acres that according to the president should give him.
The Mexican president, Claudia Sheinbaum, hastened to respond that Mexico is fulfilling the treaty in the process of water availability, attributing to the drought of recent years the delays in shipments.
Banxico minutes published yesterday also revealed that several members of the entity warned that the probability that Mexico enters recession is increasing.
USD/MXN Price levels
After the strong oscillations of recent days, there is no clear direction for the next few hours. In case of extending the fall, the initial support will be in the weekly minimum registered on Wednesday, April 9 around 20.15. A fall below this level will point to the psychological zone of 20.00 first and at least 2025 in 19.83 later.
Upwards, we would have to see a recovery above the mobile average of 100 periods in time graph at 20.59 to see an extension of the rise to the ceiling of the last two months recorded on April 9 at 21.08.
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.
