Mexican Peso Slips After Nearly Hitting a Yearly High
The exchange rate closed the day at 18.3103 pesos per dollar. Compared with Friday’s official Banxico print of 18.2953.
Quick overview
- The Mexican peso retreated after reaching a two-week high of 18.25 per dollar, closing at 18.3103 pesos per dollar.
- Traders are assessing key economic data from both Mexico and the U.S., with the Fed's upcoming policy decision expected to influence market positioning.
- U.S. manufacturing data showed contraction for the ninth month in a row, contributing to the peso's earlier strength before it reversed.
- Mexico's remittance data continues to decline, and economists have lowered growth and inflation forecasts for the country.
The peso pulled back after briefly touching 18.25 per dollar—its strongest level in two weeks—as traders assessed key economic data in both Mexico and the United States.
The Mexican peso edged lower against the dollar in the first session of December. The local currency retreated after earlier hitting a two-week high, with traders digesting important indicators on both sides of the border.
The exchange rate closed the day at 18.3103 pesos per dollar. Compared with Friday’s official Banxico print of 18.2953, the move reflects a loss of 1.5 centavos, or 0.08%. During the session, the dollar traded between a high of 18.3491 and a low of 18.2527. The U.S. Dollar Index (DXY), which measures the greenback against six major currencies, slipped 0.04% to 99.42 points.
The key support level now sits at 18.20—the year-to-date low. The Fed’s December 10 policy decision will be crucial for price action, as the central bank’s guidance is likely to drive positioning. With the exchange rate approaching the annual low of 18.2008 (set on September 17), the market may look to hedge currency exposure; early dollar buying could trigger a short-term rebound.
Markets await Powell
Data released Monday showed U.S. manufacturing contracted for a ninth consecutive month in November. The weak figures weighed on the dollar, allowing the peso to strengthen to a two-week low before later reversing.
According to CME’s FedWatch tool, futures markets assign an 85.4% probability to a 25-basis-point rate cut this month. Fed Chair Jerome Powell is set to speak at a public event tonight.
Soft signals in Mexico
While traders weigh the likelihood of a U.S. rate cut, Mexico is digesting weaker remittance data—one of the country’s main sources of foreign currency—which fell for a seventh consecutive month in October, according to Banxico.
The central bank also released its latest survey of private-sector economists. Forecasters reduced their growth outlook for Mexico in 2025 to 0.40% from 0.50%, and trimmed their inflation forecast to 3.74% from 3.78%.
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