Mexican Peso Falls Against the Dollar as Fed Rate-Cut Bets Cool

U.S. Treasury yields climbed after the Producer Price Index for July rose more than expected, slightly reducing expectations for a cut.

Written by: Ignacio Teson • Thursday, August 14, 2025 • 1 min read

• Last updated: Thursday, August 14, 2025

Quick overview

The Mexican peso weakened against the dollar, closing at 18.6402 pesos per dollar, a loss of 0.32%.
The U.S. Dollar Index rose 0.40% to 98.19, reflecting a stronger dollar amid tempered market enthusiasm for interest rate cuts.
U.S. economic data, including a higher-than-expected Producer Price Index and falling jobless claims, reduced expectations for a Federal Reserve rate cut in September.
Markets now see a 92.6% probability of a 25-basis-point cut, down from 93.8% the previous day, as Fed officials express caution regarding aggressive cuts.

The Mexican peso weakened against the dollar on Thursday as the greenback strengthened following U.S. economic data that tempered market enthusiasm for interest rate cuts.

The exchange rate closed at 18.6402 pesos per dollar, compared with Wednesday’s official close of 18.5803 pesos, according to Bank of Mexico (Banxico) data. That marks a loss of 5.99 centavos, or 0.32%, for the peso.

During the session, the dollar traded between a high of 18.8532 pesos and a low of 18.6291. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, rose 0.40% to 98.19.

USD/MXN

Rate-Cut Bets Ease

U.S. Treasury yields climbed after the Producer Price Index for July rose more than expected, slightly reducing expectations for a Federal Reserve rate cut in September. Weekly jobless claims also fell, signaling a stronger-than-expected labor market and lowering the likelihood of an aggressive cut.

According to CME’s FedWatch tool, markets are now pricing in a 92.6% probability of a 25-basis-point cut in September and a 7.4% chance of no change, compared with 93.8% and 6.2%, respectively, the day before.

St. Louis Fed President Alberto Musalem said Thursday that a 50-basis-point cut in September would not be justified given the current state of the U.S. economy.

Meanwhile, Treasury Secretary Scott Bessent—who on Wednesday floated the idea of a 50-basis-point move—said conditions still appear favorable for rate cuts. In an interview with Fox Business Network, he suggested the Fed could start with a 25-basis-point reduction and then accelerate.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.