Mexican Peso Starts the Week with Slight Decline Against the Dollar
Markets are also closely watching developments in the U.S., where bets have increased for a Federal Reserve rate cut in September.
Quick overview
- The Mexican peso slightly depreciated against the U.S. dollar, closing at 18.9069 pesos per dollar.
- This week's market focus is on critical domestic inflation data and the Bank of Mexico's upcoming monetary policy decision.
- Despite the decline, consumer confidence in Mexico reached a two-month high, stabilizing the peso by the end of the session.
- Analysts anticipate fluctuations in the peso's value, influenced by inflation reports, Banxico's decisions, and global trade tensions.
The Mexican peso slipped slightly against the U.S. dollar on Monday, bucking the trend seen among other Latin American currencies.
The mild depreciation comes at the start of a week expected to be shaped by critical domestic inflation data and the upcoming monetary policy decision from the Bank of Mexico (Banxico).
The exchange rate closed at 18.9069 pesos per dollar, compared to 18.8886 on Friday, marking a small loss of 1.83 centavos, or 0.10%, according to official data from Banxico. The dollar traded within a range of 18.7666 to 18.9534 pesos, while the U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, fell 0.40% to 98.74.
Focus on Domestic Data and Banxico Decision
Despite the slight decline, consumer confidence in Mexico hit a two-month high, and speculation is growing that Banxico may slow the pace of interest rate cuts during its Thursday meeting—factors that helped the peso stabilize by the end of the session.
Analysts believe the peso’s direction this week will be shaped by Thursday’s inflation report and Banxico’s decision, as well as ongoing global trade tensions. The U.S. is expected to implement new tariffs on several countries later this week, adding to market uncertainty.
Markets are pricing in a 25-basis-point rate cut from Banxico, but the broader reaction may depend heavily on trade headlines and the inflation figures. The peso is expected to fluctuate within the 18.75 to 19.00 range per dollar.
Fed Expectations Add to Global Picture
Markets are also closely watching developments in the U.S., where bets have increased for a Federal Reserve rate cut in September following a disappointing non-farm payrolls report last Friday.
According to CME Group’s FedWatch tool, market odds now point to a more than 93% chance that the Fed will lower its benchmark interest rate by 25 basis points in its September meeting, adding to the broader easing expectations.
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