- The Mexican Peso gives ground against the Dollar in a week of great activity for Mexico and the United States.
- Mexico’s economic agenda will include Industrial Production and the monetary policy decision of the Bank of Mexico.
- For its part, the USD/MXN awaits the US inflation report and the Federal Reserve’s decision.
The Mexican Peso (MXN) starts the week on a negative note and loses traction against the US Dollar (USD) during the American session on Monday. This week’s economic agenda on both sides of the border will feature monetary policy decisions from the US Federal Reserve (Fed) on Wednesday and the Bank of Mexico (Banxico) on Thursday. Both central banks are expected to keep rates unchanged despite uncertainty over the Fed’s tone in its monetary policy statement. The USD/MXN pair is trading at 17.43, with an advance of 0.60% on the day.
Last week’s economic data from Mexico showed the continuation of the disinflation process at a time when some of Banxico’s governors had opened the door to softening monetary policy. However, they stressed that talks will begin in the first quarter of 2024. Recently, the president of Mexico, Andrés Manuel López Obrador, said that more must be done to lower inflation, adding that Banxico must also focus on economic growth, not only in price stability.
Daily market summary: The Mexican peso operates with losses at the beginning of a hectic week
- Mexico’s inflation on the producer and consumer side diverged. However, prices continue to fall, increasing the chances that Banxico will cut rates, as Governor Victoria Rodríguez Ceja and Deputy Governor Jonathan Heath have suggested.
- However, there is a disagreement, since Deputy Governor Irene Espinosa was contrary and stated that inflationary risks are increasing.
- The latest report on China’s Consumer Price Index (CPI) depicts a deflationary scenario in the world’s second largest economy, which has stimulated flows towards safe haven currencies.
- The DXY US Dollar Index is boosting the USD/MXN pair, with the DXY Index gaining 0.10% to 104.09, supported by elevated US Treasury yields.
- The 10-year US Treasury bond rate rises three basis points, to 4.262%.
- US labor market data was mixed, indicating that the labor market is cooling at a slow pace. Following last week’s November non-farm payrolls report, traders reduced the odds of possible rate cuts by the US Federal Reserve for next year.
- The Industrial Production of October and Banxico’s monetary policy decision of December 14 stand out on the Mexican economic agenda.
- In the United States, consumer and producer inflation figures will be released ahead of the Federal Reserve’s final decision of the year. Subsequently, unemployment claims, Industrial Production and the Fed’s Regional Manufacturing Indices will be published.
Technical Analysis: Mexican Peso on the defensive as USD/MXN rises towards 17.50
The daily chart of USD/MXN shows that the pair is gaining bullish momentum, above the 100-day SMA at 17.39, which could pave the way for further upside. However, buyers need to recapture the psychological figure of 17.50 so that the exotic pair can challenge the 18.00 level. On their way to the latter, buyers must reclaim the 200-day SMA at 17.54, followed by the 50-day SMA at 17.67.
On the contrary, if USD/MXN sellers drag prices below the 100-day SMA, they could hold out hope that the pair will fall further. First support would be the 17.00/17.05 area, before challenging the current yearly low of 16.62.
Frequently Asked Questions about the Mexican Peso
What is MXN?
The Mexican Peso is the legal tender of Mexico. The MXN is the most traded currency in Latin America and the third most traded on the American continent. The Mexican Peso is the first currency in the world to use the $ sign, prior to the later use of the Dollar. The Mexican Peso or MXN is divided into 100 cents.
What is Banxico and how does it influence the MXN?
Banxico is the Bank of Mexico, the country’s central bank. Created in 1925, it provides the national currency, the MXN, and its priority objective is to preserve its value over time. In addition, the Bank of Mexico manages the country’s international reserves, acts as a lender of last resort to the banks and advises the government economically and financially. Banxico uses the tools and techniques of monetary policy to meet its objective.
How does inflation impact the MXN?
When inflation is high, the value of the Mexican Peso (MXN) tends to decrease. This implies an increase in the cost of living for Mexicans that affects their ability to invest and save. At a general level, inflation affects the Mexican economy because Mexico imports a significant amount of final consumption products, such as gas, fuel, food, clothing, etc., and a large amount of production inputs. On the other hand, the higher the inflation and debt, the less attractive the country is for investors.
How does the Dollar influence the Mexican Peso (MXN)?
The exchange rate between the USD and the MXN affects imports and exports between the United States and Mexico, and may affect demand and trade flows. The price of the Dollar against the Mexican Peso is affected by factors such as monetary policy, interest rates, the consumer price index, economic growth and some geopolitical decisions.
How does the Fed’s monetary policy affect Mexico?
The exchange rate between the USD and the MXN affects imports and exports between the United States and Mexico, and may affect demand and trade flows. The price of the Dollar against the Mexican Peso is affected by factors such as monetary policy, interest rates, the consumer price index, economic growth and some geopolitical decisions.
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.