Mexican Peso Weakens as Markets Brace for Fed Decision
On the domestic front, the latest data showed Mexico’s seasonally adjusted unemployment rate rose to 3.0% in September.
Quick overview
- The Mexican peso weakened against the dollar, closing at 18.4315 pesos per dollar, a 0.19% depreciation.
- Investor caution is prevalent ahead of key monetary policy announcements from central banks, including the U.S. Federal Reserve.
- Markets anticipate a 25 basis point cut in the Fed's benchmark rate, while traders are also focused on an upcoming meeting between U.S. and Chinese leaders.
- Mexico's unemployment rate rose to 3.0% in September, the highest since August 2024.
The Mexican peso weakened against the dollar on Tuesday, as the local currency lost ground amid a steadier greenback and investor caution ahead of key monetary policy announcements from several central banks, including the U.S. Federal Reserve (Fed).
The exchange rate closed at 18.4315 pesos per dollar, compared with 18.3961 on Monday, according to data from the Bank of Mexico (Banxico). The move represented a 0.19% depreciation, or 3.54 centavos.
The dollar traded within a narrow range of 18.3819 to 18.4651 pesos, while the U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, edged down 0.09% to 98.73 points.
Markets are positioning for a series of monetary policy announcements this week, with near-unanimous expectations that the Fed will cut its benchmark rate by 25 basis points, according to the CME FedWatch tool.
Traders are also watching the upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping, scheduled for Thursday in South Korea. The encounter could result in a broad trade agreement aimed at easing recent tensions between the two largest economies.
Despite short-term volatility, Mexico remains supported by its high yield differential and close trade ties with the United States, though bilateral politics and global dollar movements continue to shape the peso’s trajectory.
In overnight trading, analysts expect the exchange rate to remain within a range of 18.39 to 18.46 pesos per dollar, reflecting a softer dollar but also yen strength linked to carry trade strategies involving the peso.
On the domestic front, the latest data showed Mexico’s seasonally adjusted unemployment rate rose to 3.0% in September, its highest since August 2024, compared to 2.9% a year earlier.
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