Mexican Peso Takes Advantage of Dollar Weakness, Appreciates by 1.62%

The Local Currency Gained Ground, Supported by Increased Global Appetite for Risk Assets Following U.S. Data That Boosted Expectations of Federal Reserve Rate Cuts

The Mexican peso strengthened significantly in Thursday’s session. The local currency gained ground due to a greater global appetite for risk assets, following U.S. data that bolstered expectations of interest rate cuts by the Federal Reserve.

The exchange rate ended the day at 19.4724 pesos per dollar. Compared to Wednesday’s rate of 19.7935 pesos, according to data from the Bank of Mexico (Banxico), this represents a gain of 32.11 cents for the peso, equivalent to a 1.62% appreciation.

The dollar traded in a range with a high of 19.8470 pesos and a low of 19.4618 pesos. The Dollar Index (DXY) from the Intercontinental Exchange, which measures the greenback against a basket of six major currencies, fell by 0.40% to 101.28 points.

The dollar weakened in the market after the release of U.S. producer inflation data that was in line with expectations. This followed a consumer inflation report that showed the lowest levels since February 2021, which had already sparked optimism the day before.

Meanwhile, U.S. jobless claims rose slightly last week to 230,000, higher than the expected 225,000 and up from the previous week’s 228,000. The data indicates a still-resilient labor market.

We could point to a weakening dollar in response to economic data hinting at a slowdown, which increases the likelihood of interest rate cuts. The imminent rate cut expected at next week’s Federal Reserve meeting further weakened the dollar, while the increased appetite for risk assets supported emerging market currencies.