Mexican Peso Declines After U.S. Inflation Data, Marks Third Consecutive Drop
The U.S. Consumer Price Index (CPI) rose 0.3% in June, up from 0.1% in May — its largest monthly increase since January.
Quick overview
- U.S. inflation data strengthened the dollar, leading investors to expect steady interest rates from the Federal Reserve until at least September.
- The Mexican peso weakened for the third consecutive session, closing at 18.8188 pesos per dollar, a loss of 0.48%.
- The U.S. Consumer Price Index rose 0.3% in June, prompting traders to rule out a Fed rate cut in July.
- Ongoing tariff threats from the U.S. have added to market caution, with President Trump announcing a 30% tariff on Mexican imports.
U.S. price data strengthened the dollar, as investors bet the Federal Reserve will hold interest rates steady at least until September.
The Mexican peso weakened against the dollar for a third consecutive session on Tuesday. The local currency lost ground after U.S. inflation data came in line with expectations, reinforcing the dollar’s upward momentum.
The exchange rate closed the day at 18.8188 pesos per dollar, compared to Monday’s official close of 18.7293, according to data from the Bank of Mexico (Banxico). That marked a daily loss of 8.95 centavos, or 0.48%.
The dollar traded within a range of 18.6503 to 18.8845 pesos. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, rose 0.53% to 98.64 points.
Stable Rates Expected in the U.S.
The U.S. Consumer Price Index (CPI) rose 0.3% in June, up from 0.1% in May — its largest monthly increase since January. Year-over-year, headline inflation climbed to 2.7%, up from 2.4% the previous month.
Following the release, traders largely priced out the possibility of a Fed rate cut in July, according to CME Group’s FedWatch tool. Markets now expect the central bank to hold rates steady at its July 29–30 meeting and begin cutting in September.
The sharp rise in inflation has effectively ruled out a July cut, with any easing likely postponed until there is a more substantial drop in inflation.
Cumulative Decline
The peso has now weakened for three straight trading sessions. Compared to last Thursday’s close of 18.6169, it has lost a total of 20.19 centavos, or 1.09%. Market participants also remain cautious amid ongoing tariff threats from the U.S.
President Donald Trump recently announced a 30% tariff on Mexican imports effective August 1, along with a separate 17.09% tariff specifically targeting Mexican tomatoes. Mexican President Claudia Sheinbaum said her administration is evaluating support measures for affected producers.
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