- The Mexican weight weakens 0.48% despite the fact that the data of the labor and trade market in Mexico surprise up.
- Commercial tensions between the US and China cloud the feeling of risk, limiting the upward potential of the weight.
- The operators are attentive to the GDP of Mexico Q1, business confidence and manufacturing PMI data this week.
The Mexican peso weakened 0.48% against the US dollar on Monday, despite the profits on Wall Street and a 0.64% drop in the US dollar index (DXY). At the time of writing, the USD/MXN is quoted in 19.58 after bouncing from daily minimums of 19.47.
Market participants are still concerned about US business policies. CNBC revealed that China insists that there are no conversations about ongoing tariffs with Trump and XI or with its advisors, despite US statements.
Meanwhile, the economic agenda of Mexico revealed data from the labor market, which showed that the economy continues to create jobs in the middle of an ongoing economic slowdown. At the same time, the commercial balance in March registered a surplus, since exports surpassed imports, according to the National Institute of Statistics and Geography (INEGI).
Although the data further favored the decrease of the USD/MXN, the operators are still reluctant to buy the weight amid uncertainty about US commercial news.
The economic agenda of Mexico will present figures from the Gross Domestic Product (GDP) for the first quarter, together with the publication of business confidence and the data of the Global S&P manufacturing PMI for April.
What moves the market today: the Mexican weight depreciates despite publishing solid data
- The commercial balance of Mexico registered a surplus of 3,422 million dollars, exceeding the forecasts of 2.60 billion, an increase of 9.6% compared to the February figures.
- The unemployment rate fell 2.5% in the month before 2.2% in March, below the forecasts of a 2.4% drop.
- The economic activity of Mexico in February expanded an intermensual 1%, above the forecasts of a growth of 0.6%. In annual terms, the activity fell from 0% to -0.7%, better than expected.
- The economic data revealed during the week showed an inflation reactivation in the first half of April, according to INEGI. Retail sales in February were lower than expected, showing the ongoing economic slowdown.
- Last week, the subgovernor of Banxico, Omar Mejía Castelazo, revealed that the economy has been experiencing a slowdown since 2023, he said in Washington.
- The CITI Mexico expectations survey shows that economists expect Banxico to cut their rate at 50 basic points at the May meeting. For the whole year, they project that the main reference rate ends about 7.75%.
- As for the USD/MXN exchange rate, private analysts see that the exotic pair ends in 20.93, above 20.90. It is projected that inflation in 2025 ends at 3.78% with underlying figures at 3.80%, mostly aligned with the previous survey.
- Mexico’s economy is expected to grow 0.2% in 2025, below 0.3% projected in the previous survey.
Technical perspective of the USD/MXN: The Mexican weight remains bullish while the USD/MXN is maintained below the 200 -day SMA
The USD/MXN has a bearish trend after overcoming the simple 200 -day mobile average of 19.94, which sponsored the last stage of the pair of annual minimums of 19.46. Although sellers are in charge, they must print a daily closure below the latter, so that the pair can be prepared to challenge the psychological level of 19.00.
On the contrary, if the USD/MXN rises above the 200 -day SMA, buyers could push the exchange rate by 20.00. If it exceeds, the next step would be the 20 -day SMA at 20.15.
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.
.jpg "Who is Lara Reado, the (presumed) new girlfriend of Jannik Sinner’s girlfriend")
