Mexican Peso Loses Ground Due to Dollar Global Strength

The Mexican peso depreciated against the dollar on Wednesday morning, losing ground due to a global advance of the greenback while markets await new comments from Federal Reserve (Fed) officials.

The spot exchange rate stands at 16.9351 pesos per dollar. Compared to yesterday’s official close of 16.8049 pesos, according to data from the Bank of Mexico (Banxico), this movement represents a loss of 13.02 centavos or 0.78 percent for the peso.

The dollar’s price is operating within a broad range, with a high of 16.9470 pesos and a low of 16.7430 pesos. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, increased by 0.21% to 104.83 points.

The peso is retreating while the dollar is advancing, driven by the rising yield of Treasury bonds. This occurs after recent comments from Fed members have dampened expectations of interest rate cuts.

USD/MXN

According to the CME Group’s FedWatch tool, interest rate futures now indicate that the first Fed rate cut will not occur until November. Just yesterday, the first rate cut was anticipated for September.

Statements from Fed officials have influenced these expectations. Neel Kashkari, President of the Minneapolis Fed, mentioned that while the probability of a rate hike is low, it is not impossible, and more data is needed to make a decision.

Meanwhile, it is expected that today, New York Fed President John Williams and Atlanta Fed President Raphael Bostic will speak at public events.

On the local front, traders will be focused on Banxico’s quarterly report, which will be published at noon. Another factor to consider will be the closing campaigns of the presidential candidates ahead of Sunday’s election.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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