- Mexico's inflation accelerates in April, but Banxico's heath signals allow the path to continue.
- The USD/MXN was forced by enhanced sentiment at risk after trading deals with US-UK currencies in EM.
- Despite the strong US claiming data that unemployed, the US dollar remains in advance of Friday's Fed commentary.
Mexican Peso moved forward on Thursday against the greenback as prices in Mexico accelerated near the top of the Banco de Mexico (Banxico) inflation tolerance. In addition, an improving appetite due to the US/UK trade deal has increased peso appeal. At the time of writing, USD/MXN trading at 19.55, down 0.15%.
Inflation in Mexico was accelerated in April, as revealed by Instituto Nacional de State Although Banxico suggested this, deputy governor Jonathan Heath, said that the central bank will continue to lower its interest rates, even though inflation risks are sinking upside down.
Heath added that in the second half of 2025, the decision was more cautious, adding that there was a policy prevention room. Meanwhile, market participants seem to be confident that Banxico will reduce rates of 50 basic points at the May 15 meeting.
In the US, President Donald Trump announced a trade deal in the UK, that market participants have noticed as positive news, and supported the emerging currency (EM) currency. Wall Street expanded its acquisitions on Thursday, leading a busy schedule for Fed officials on Friday, which is expected to take titles in the midst of an out of economic docket.
The data is smart, the number of Americans filling out for unemployment benefits is less than expected, indicating a stable labor market. Despite this, the USD/MXN failed to get traction, remaining in the sun and confined to 19.50-19.61.
Sun -Sun Digest Market Movers: Mexican Peso holds firmly as emotionally improves
- Following the Fed's decision, data from the Chicago Board of Trade (CBOT) suggests that entrepreneurs have priced 67 bps of emergence until the end of 2025.
- Mexico's April CPI rose 3.93% yoy, above 3.90% forecast and up from 3.80% compared to last year's scope. The core CPI increased by 3.93%, from 3.64%, exceeding estimates of 3.92%.
- The Citi Mexico's expectation survey suggests that most analysts expect Banxico to cut the rates of 50 BPS at the May 15 meeting.
- The US initial claims claimed for the week of May 3 to enter 228K, slightly below the expected 230k and an improvement from 241K last week, according to the Labor Department. The data indicates a moderate rebound in the stability of the labor market.
- Although the Mexican economy is narrowly avoiding a technical backwards, tariffs imposed on Mexico products, a reduced budget, and geopolitical uncertainty will continue to give the country's finances financially and affect the peso.
The technical perspective of USD/MXN: Mexican Peso loses steam while combined with USD/MXN
The USD/MXN is bearishly bias, even though the sellers have failed to drag the exchange rate that has passed the current-to-date (YTD) of less than 19.46. This suggests a lack of bears strength, a path clearing for a recovery.
Momentum remains bearish, yet the Kamag -child Index Index (RSI) flattish slope proves to be integrated.
If the USD/MXN drops below 19.46, the next support is the 19.00 psychological figure. Conversely, if the USD/MXN climbed over the past 19.78, expect a 200-day SMA test at 19.98. A violation of the latter will expose the 20.00 mark.
Mexican peso faqs
Mexican Peso (MXN) is the most traded currency among Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country's central bank policy, the value of foreign investment in the country and even the levels of remittances sent by Mexicans living abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the nearsshoring process – or the decision of some companies to shift manufacturing capacity and supply chain closer to their home countries – is also seen as a catalyst for Mexico's money because the country is considered a major manufacture hub of American continent. Another catalyst for MXN is oil prices because Mexico is a major exporter of goods.
The main purpose of the central bank of Mexico, also known as Banxico, is to maintain inflation at a low and stable level (at or near its target of 3%, the midpoint at a tolerance band between 2%and 4%). To this day, the bank sets an appropriate level of interest rates. When inflation is too high, Banxico will try to tame it by increasing interest rates, making it more expensive for households and businesses to borrow money, thus cooling demand and the general economy. The higher interest rates are usually positive for the Mexican Peso (MXN) as they lead to higher yields, making the country more attractive -the country is more attractive for investors. Conversely, lower interest rates tend to soften the MXN.
Macroeconomic data leaks are key to assessing the state of the economy and may have an impact on Mexican Peso (MXN) appreciation. A powerful Mexican economy, based on high economic growth, low unemployment and high confidence are good for MXN. Not only does it attract more foreign investment but it can encourage the Bank of Mexico (Banxico) to increase interest rates, especially if this strength is accompanied by high inflation. However, if economic data is weak, MXN is likely to deduct.
As an emerging market market, Mexican Peso (MXN) tends to exert during risk periods, or when investors find that greater market risks are low and thus eager to engage in investments that carry a higher risk. Conversely, MXN tends to weaken in times of market disturbance or economic uncertainty because investors tend to sell increased risk properties and flee to more stable safe havens.
