Quick overview

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The peso strengthened on Wednesday after posting its largest single-day loss of the year in the previous session, as concerns over the economic impact of the Middle East conflict had rattled markets.

The Mexican currency rebounded against the dollar, with the exchange rate closing at 17.5592 pesos per dollar. Compared with Tuesday’s official close of 17.6367, according to data from the Banco de México (Banxico), this marked a gain of 7.75 centavos, or 0.44%.

The dollar traded in a range between a high of 17.7738 pesos and a low of 17.5247. The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, slipped 0.27% to 98.79.

Jitters ease, but volatility lingers

Earlier, The New York Times reported that Iranian intelligence officials were willing to engage in talks with the CIA to end the war, helping to calm nerves in financial markets. However, analysts cautioned that volatility could persist.

The Middle East conflict remains the primary catalyst for market moves, with mixed signals about its trajectory and the risk of further escalation keeping investors highly sensitive. Oscillator indicators suggest there is still room for additional peso weakness.

A key level for the exchange rate stands at 17.70; a sustained move above that threshold could open the door toward 18.00 pesos per dollar. This week, the heaviest trading volumes have been concentrated around 17.30 and 17.70, potentially defining a short-term range — although a move toward 18.00 cannot be ruled out if tensions intensify.

U.S. labor data in focus

On the economic front, data released Wednesday showed that U.S. private-sector hiring increased by 63,000 jobs last month, following a revised gain of 11,000 in January. Economists had expected an increase of 50,000 positions.

The figures come ahead of Friday’s closely watched official employment report, which includes the unemployment rate, nonfarm payrolls and average hourly earnings. In the meantime, traders are likely to remain focused on headlines related to developments in the Middle East.