Quick overview

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The Mexican peso gained ground against the United States dollar on Tuesday, supported by improved market sentiment and extending the previous session’s rebound after comments from U.S. President Donald Trump regarding Iran.

The exchange rate closed the session at 17.5903 pesos per dollar. Compared with Monday’s close of 17.6711, according to official data from the Banco de México, the move represented an appreciation of 8.08 centavos, or 0.46%, for the Mexican currency.

During the session, the dollar traded within a range between 17.6993 and 17.4511 pesos. Meanwhile, the U.S. Dollar Index (DXY), which tracks the dollar against six major currencies, rose 0.21% to 98.94 points.

Higher risk appetite

Trump said on Monday that the war had already inflicted severe damage on Iran and predicted that the conflict could end earlier than the four weeks initially expected. Until now, the hostilities had been pushing oil prices higher and raising concerns about the global economy.

Analysts noted that the de-escalation narrative promoted by Trump, along with the Group of Seven willingness to release oil reserves, triggered a sharp drop in crude prices and contributed to a broader weakening of the dollar.

However, the rhetoric contrasts with developments on the ground in Iran, which experienced its most intense day of bombings since the war began more than a week ago. Iranian authorities have threatened to block oil shipments from the Middle East until U.S. attacks cease.

Oil remains the main source of tension for global markets, particularly due to risks to supply and to shipping flows through the Strait of Hormuz, a critical route for global crude trade.

Key data ahead

For Wednesday, investors will continue to monitor headlines about the conflict, but economic data will also take center stage with the release of the U.S. inflation report, a key indicator for the future path of interest rates set by the Federal Reserve.