Mexican Peso Ends Flat Against the Dollar After Local Investment Data
The exchange rate finished the day at 18.2838 pesos per dollar, compared with 18.2826 in the previous session, according to new figures.
Quick overview
- Market participants are evaluating the potential for further interest-rate cuts by the U.S. Federal Reserve.
- The Mexican peso ended the session nearly unchanged against the U.S. dollar, closing at 18.2838 pesos per dollar.
- Corporate investment in Mexico decreased by 0.3% in September, while the government announced a 13% minimum wage increase for next year.
- There is an 88.8% probability that the Federal Reserve will cut its policy rate by 25 basis points next week.
Market participants in the foreign-exchange space continue to assess the likelihood of further interest-rate cuts by the U.S. Federal Reserve.
The Mexican peso ended Wednesday’s session flat against the U.S. dollar. The local currency closed virtually unchanged as traders digested the latest economic data from Mexico and U.S. employment figures.
The exchange rate finished the day at 18.2838 pesos per dollar, compared with 18.2826 in the previous session, according to official figures from the Bank of Mexico (Banxico). This represented a marginal depreciation of 0.01%, or less than one centavo.
The dollar traded within a range between 18.2847 at the high and 18.2473 at the low. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.44% to 98.90.
“The exchange rate continues to trade without major swings; today’s range has been between 18.24 and 18.29 pesos. The highest trading volumes so far this month have appeared around 18.31 and 18.27,” analysts noted.
Session Catalysts
Corporate investment in Mexico fell 0.3% in September compared with August, according to data from Inegi. Gross fixed investment dropped 6.7% year over year in September. In addition, the Mexican government announced a 13% increase in the minimum wage for next year.
Earlier in the session, the peso had strengthened as the dollar retreated alongside Treasury yields, following data showing that U.S. private payrolls posted their sharpest monthly decline since early 2023.
The exchange rate is approaching the year-to-date low of 18.2008 pesos per dollar, recorded on September 17. This suggests that the market might seize the opportunity to take on FX hedges or engage in early dollar buying.
Traders were also absorbing the increasing possibility that U.S. President Donald Trump may choose Kevin Hassett as the next chair of the Federal Reserve — a candidate seen as likely to support additional rate cuts.
Fed Outlook
Markets currently assign an 88.8% probability that the Federal Reserve will cut its policy rate by 25 basis points next week, which would mark the third consecutive reduction of that size. The rate outlook for next year remains more uncertain.
Volatility could rise later in the week as investors await Friday’s release of the September PCE Price Index, the Fed’s preferred inflation gauge.
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