- The Mexican weight is recovered from a strong fall due to the US commercial threats, showing market resilience.
- Despite the improvement in the appetite for risk, Trump reaffirmed tariff plans on key industries maintain the market tension.
- The operators are aware of Mexico’s economic indicators, including the December unemployment rate and the preliminary GDP of the fourth quarter.
The Mexican weight (MXN) recovered some land after Monday’s session, when more than 2% was depreciated due to the commercial threats of the president of the United States (USA), Donald Trump, to Colombia for their reluctance to Accept Washington’s conditions on the reception of airplanes that transport illegal immigrants. The USD/MXN is quoted at 20.54, with a 0.49%drop.
The appetite for the risk improved during the day after Monday’s mass sale, partly due to the advance of the Chinese company Deepseek in AI and Trump’s commercial rhetoric. Although the AI fever has moderated, Trump redoubled its commercial policies, saying that it would apply chips tariffs, pharmaceutical products, aluminum, steel and copper.
The economic agenda of Mexico is absent on Tuesday, unlike the US, the requests for lasting goods in December disappointed investors, but excluding transport increased, a sign that business spending will probably improve in the first quarter of 2025 .
On the consumer side, the Board Conference (CB) revealed that Americans are less optimistic about the economy. The report revealed that labor market conditions fell for the first time in four months, since people became pessimistic about future employment perspectives.
This week, the economic agenda of Mexico will include the December unemployment rate, together with the publication of the preliminary figures of the Gross Domestic Product (GDP) of the fourth quarter of 2024.
Daily market summary: the Mexican weight can be seen while Banxico becomes moderate
- The Bank of Mexico (Banxico) presented its monetary program by 2025, in which the Central Bank hinted that the Governing Board is considering cuts to the main reference rate of Mexico of a magnitude greater in view in 2024.
- Economists surveyed by Reuters project that the GDP of Mexico will fall by -0.2% intertrimestral from an expansion of 1.1%. In annual terms, GDP is expected to decrease 1.6% to 1.2%.
- Citi revealed his expectations survey, in which Mexican private economists reviewed the GDP figures by 2025 to 1%. Regarding inflation, economists expect the consumer price index (CPI) to be 3.91%, while the underlying IPC is projected at 3.68%. Both figures are within 3% or less 1% of Banxico.
- The USD/MXN exchange rate is expected to end around 20.95 in 2025.
- Banxico is expected to reduce the rates at 25 basic points (PB) from 10.00% to 9.75%, although some analysts expect a 50 PB cut at the February 6 meeting.
- The orders of the US durable goods collapsed to -2.2% intermensual in December, not reaching the increase of 0.8% expected by economists and worse than the contraction of -2% of November.
- The Board Conference revealed that US consumer confidence fell to 104.1, below 105.6 provided by analysts. The report showed that the five index components deteriorated.
- Futures of the money market have discounted 54 bp of feat cuts from the Fed in 2025, according to the data of the CME Fedwatch tool.
Technical Perspective of the USD/MXN: The Mexican weight rises while the USD/MXN expands its losses
The USD/MXN remains at the time of writing, although it reached a maximum of five days of 20.77 while buyers pointed to the annual maximum (YTD) of 20.90. The impulse is slightly inclined down, but the main trend is upward, as shown in the relative force index (RSI).
However, the bassists are on the prowl as they pushed the exotic pair down, but if they expect to reach lower prices, they need to overcome the psychological figure of 20.50. In that case, the following support would be the single mobile average of 50 days at 20.38, followed by the 100 -day SMA at 20.06. Once those levels are taken, the next figure is 20.00.
On the contrary, if the USD/MXN rises beyond the annual maximum of 20.90, the following resistance would be 21.00 before the peak of March 8, 2022 in 21.46. A rupture of this last one will expose 22.00.
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 policy of the Central Bank of the country, the amount of foreign investment in the country and even the 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 currency Mexican, 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 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.
