Mexican Peso Strengthens as the U.S. Dollar Weakens
The ICE Dollar Index (DXY), which measures the greenback against a basket of six major currencies, slipped 0.33% to 98.34 points.
Quick overview
- The Mexican peso strengthened against the U.S. dollar, closing at 18.4318 pesos per dollar due to broad dollar weakness.
- Federal Reserve officials are signaling support for additional interest rate cuts, with a high probability of a 25-basis-point cut at the upcoming meeting.
- Markets are closely watching U.S.-China trade tensions, which could impact U.S. economic growth next year.
- The peso's rise indicates a bearish break below the 18.40 support level, driven by increased demand for risk assets.
The Mexican peso inched higher against the U.S. dollar on Thursday, supported by broad dollar weakness as investors increased their bets on additional Federal Reserve interest rate cuts this year.
The exchange rate closed at 18.4318 pesos per dollar, improving from 18.4723 in the previous session, according to data from Banco de México (Banxico). This represents a gain of 4.05 centavos, or 0.22%.
During the session, the dollar traded between a high of 18.4740 and a low of 18.3564 pesos. The ICE Dollar Index (DXY), which measures the greenback against a basket of six major currencies, slipped 0.33% to 98.34 points.
Fed Officials Signal More Cuts
Federal Reserve Governor Christopher Waller said he supports another rate cut at the central bank’s late-October meeting. Other key Fed officials have echoed this view amid signs of a weakening labor market.
According to the CME FedWatch Tool, futures are pricing in a 96.8% probability of another 25-basis-point cut, bringing the target range to 3.75%–4.00%.
Trade Tensions Still in Focus
Markets are also keeping a close eye on U.S.–China trade tensions. Fed Governor Stephen Miran warned that U.S. economic growth next year could depend on whether global trade risks materialize.
For now, the peso is benefiting from dollar softness and improved risk appetite as traders monitor the possibility of escalating global supply chain disruptions.
Technical Breakout
From a technical perspective, the peso’s appreciation marks a bearish break below the key 18.40 support level, reflecting broader dollar weakness and growing demand for risk assets.
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