- The Mexican weight ignores the modest rebound of the USD while the distrust of the market persists in the independence of the Fed.
- The USD/MXN rises 0.05% after 3% of the weight last week, driven by political agitation in Washington.
- Sheinbaum says there is still no agreement with Trump on tariffs, defends Mexico’s commercial position on steel and aluminum.
- Key data from Mexico in sight: retail sales, inflation in mid -April and economic activity will mark the weight management.
The Mexican peso erased some of its previous profits, however, it is still prepared to continue gaining ground against the US dollar, since investors keep the dollar firm after the comments of the president of the US, Donald Trump, that he could dismiss the president of the Federal Reserve (Fed), Jerome Powell, which shook the markets. The USD/MXN is quoted at 19.71, rising 0.05%.
Last week, the peso registered about 3% of profits, with the USD/MXN falling from 20.29 to 19.70, since market participants sold the US dollar due to their lack of confidence in those responsible for the policy. The commercial war weighed on the dollar, since the index of the US dollar (DXY), which follows the performance of the US currency compared to six others, fell 1.06% to 98.35.
The president of Mexico, Claudia Sheinbaum, commented that there is no agreement with Trump on the elimination of US tariffs. He said: “We did not reach an agreement, but we established our arguments. In the case of steel and aluminum, we established that we have a deficit. USA exports more steel and aluminum to Mexico than Mexico to the US”
The economic agenda of Mexico will be occupied this week, with the operators waiting for the publication of retail sales, inflation in the middle of the month and the economic activity data.
Mexican products have dodged most tariffs. However, US imports of steel, aluminum, cars and car parts remain 25%tariffs. Last week, Washington decided to apply 21% tariffs to tomatoes.
Daily summary of market movements: the Mexican weight remains firm in the middle of an absent economic agenda
- The positions between the Bank of Mexico (Banxico) and the Fed favor a greater increase in the USD/MXN. At the May meeting, Banxico is expected to lower interest rates in 50 basic points (BPS). On the contrary, Fed is considered cautious, since some officials have expressed concerns about a reactivation of tariff inflation.
- Inflation in the middle of Mexico is expected to increase 3.67% to 3.79% year -on -year and that underlying figures will increase from 3.56% to 3.77% year -on -year.
- Economists project that the Mexican economy will probably improve in February after contracting -0.2% monthly in January and will expand 0.6%. Every year, it is projected that the economy is drastically contracted from -0.1% to -0.6%.
- The governor of Banxico, Victoria Rodríguez Ceja, said the Central Bank is ready to continue flexible.
- Monetary market participants have incorporated 96 basic FED flexibility points towards the end of 2025, with the first expected cut in July.
Technical perspective of the USD/MXN: The Mexican weight remains firm while the USD/MXN remains below 20.00
The USD/MXN became bassist after falling below the simple mobile average (SMA) of 19.89. This exacerbated the fall around 19.58, a minimum of five months, before cutting some losses. The relative force index (RSI) has shown that sellers are losing impulse, opening the door to buyers to challenge the 200 -day SMA.
A rupture of this last will expose the psychological barrier of 20.00. If it is exceeded, the next stop would be the confluence of the maximum of April 14 and the 50-day SMA about 20.25-20.29 before trying the 100-day SMA in 20.33.
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.
