Mexican Peso Strengthens Ahead of Inflation Data and Banxico Decision
The dollar has weakened amid growing expectations that the Federal Reserve (Fed) will cut interest rates at its September meeting.
Quick overview
- The Mexican peso strengthened against the U.S. dollar, closing at 18.6142 pesos per dollar, a gain of 0.66%.
- This strengthening is attributed to expectations of U.S. interest rate cuts and anticipation of upcoming inflation data.
- The U.S. Dollar Index fell by 0.54% amid growing expectations for a quarter-point rate cut by the Federal Reserve.
- Trade policy concerns, including potential new tariffs on countries buying Russian oil, have added to the dollar's decline.
The Mexican peso strengthened against the U.S. dollar in midweek trading, supported by expectations of interest rate cuts in the United States and anticipation surrounding upcoming inflation data and the Bank of Mexico’s (Banxico) policy announcement tomorrow.
The spot exchange rate stood at 18.6142 pesos per dollar, compared to Tuesday’s close of 18.7378, according to official data from Banxico. This marks a gain of 12.36 centavos for the peso, or 0.66%.
The dollar traded within a range between a high of 18.7447 and a low of 18.5817 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, dropped 0.54% to 98.23 points.
The dollar has weakened amid growing expectations that the Federal Reserve (Fed) will cut interest rates at its September meeting. According to the CME Group’s FedWatch tool, markets are now pricing in a 93.2% probability of a quarter-point cut.
Locally, traders are bracing for July inflation figures and Banxico’s monetary policy decision, both due Thursday. After four consecutive 50-basis-point cuts, the central bank is widely expected to slow the pace of easing to 25 basis points.
Market Outlook – Projections
Support for the exchange rate is seen around the 18.60 and 18.50 peso levels, while a return to the 18.7300 zone—where weekly trading volume has been concentrated—cannot be ruled out.
The main catalyst in today’s session, however, was trade policy. U.S. President Donald Trump warned that he may impose new tariffs on countries purchasing Russian oil, adding to global trade uncertainty and contributing to the dollar’s decline.
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