Mexican Peso Strengthens Ahead of Banxico Minutes
The spot exchange rate stood at 18.7562 pesos per dollar, compared with 18.8176 at Tuesday’s close, according to official data.
Quick overview
- The Mexican peso strengthened on Wednesday, recovering from previous losses as markets reacted to the Federal Reserve's meeting minutes.
- The spot exchange rate improved to 18.7562 pesos per dollar, marking a gain of 0.33%.
- The Fed's minutes indicated a preference for maintaining current interest rates, though some members suggested a potential rate cut to support the labor market.
- Market focus is now on Fed Chair Jerome Powell's upcoming speech and Banxico's monetary policy minutes release.
The Mexican peso gained ground on Wednesday, recovering after two consecutive sessions of losses, as markets digested the minutes from the Federal Reserve’s latest monetary policy meeting.
The spot exchange rate stood at 18.7562 pesos per dollar, compared with 18.8176 at Tuesday’s close, according to official data from the Bank of Mexico (Banxico). The move represents a gain of 6.14 centavos, or 0.33% for the peso.
During the session, the dollar traded in a range between 18.8460 and 18.7244 pesos. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, edged up 0.02% to 98.30.
Fed Minutes
The Fed’s minutes showed that the majority of participants favored keeping rates unchanged. “Nearly all participants considered it appropriate to maintain the target range for the federal funds rate,” the document noted.
However, two members of the Federal Open Market Committee (FOMC) expressed support for a 25-basis-point cut to prevent further labor market weakness following recent soft data. Traders interpreted the minutes as sending mixed signals regarding end-of-year rates, labor market conditions, and the ongoing effects of tariffs.
Focus on Monetary Policy
Market attention now turns to Fed Chair Jerome Powell, who will speak on Friday at the annual central bankers’ symposium in Jackson Hole. According to CME’s FedWatch tool, the market assigns an 81.1% probability to a 25-basis-point rate cut in September.
Locally, traders are also awaiting tomorrow’s release of Banxico’s monetary policy minutes, which detailed a 25-basis-point rate cut, bringing the policy rate to 7.75%, signaling a moderation in the pace of tightening.
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