Fed Cut Hopes Send Mexican Peso Soaring
Analysts believe the peso’s positive bias could continue in the short term, with technical support at 18.40 and resistance at 18.60.
Quick overview
- The Mexican peso appreciated against the U.S. dollar, closing at 18.4723 pesos per dollar, supported by a weaker dollar and expectations of Fed interest rate cuts.
- The U.S. Dollar Index fell 0.39% to 98.67 points, while the peso gained 0.18% compared to the previous day.
- Fed Chair Jerome Powell indicated that future rate adjustments will depend on labor market data, while Banxico's Deputy Governor cautioned against aggressive rate cuts until inflation trends downward.
- Mexican stock markets rose, with the S&P/BMV IPC index increasing by 1.14% ahead of third-quarter corporate earnings reports.
The Mexican peso appreciated against the U.S. dollar on Wednesday, supported by a weaker greenback and persistent market expectations of further interest rate cuts by the Federal Reserve (Fed).
The exchange rate closed the session at 18.4723 pesos per dollar. Compared to Tuesday’s official close of 18.5064 pesos, according to data from the Bank of Mexico (Banxico), the peso gained 3.41 centavos, or 0.18%.
During the session, the dollar traded in a range between a high of 18.5156 and a low of 18.4351 pesos. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, fell 0.39% to 98.67 points.
Fed Chair Jerome Powell left the door open to further rate adjustments, noting that the labor market is stagnating with weak hiring and layoffs, and that the central bank will remain data-dependent “meeting by meeting.”
On the domestic front, Banxico Deputy Governor Jonathan Heath said the central bank should not rush into aggressive rate cuts until inflation clearly resumes a downward trend.
Analysts believe the peso’s positive bias could continue in the short term, with technical support at 18.40 and resistance at 18.60. Traders are watching for signals to determine direction, with the largest volume concentrated around 18.46. The 18.54–18.70 range is expected to act as a resistance zone in the near term.
Mexican Equity Market
Mexican stock markets traded higher on Wednesday, supported by optimism ahead of third-quarter corporate earnings reports.
The benchmark S&P/BMV IPC index of the Mexican Stock Exchange (BMV), which tracks the most traded local stocks, rose 1.14% to 61,476.77 points.
Meanwhile, the FTSE BIVA index of the Institutional Stock Exchange (Biva) gained 1.18% to 61,505.13 points.
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