Quick overview

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The Mexican peso appreciated against the U.S. dollar in Wednesday’s session, recovering earlier losses as investors continued to monitor U.S. President Donald Trump’s visit to China and his expected meeting with Chinese President Xi Jinping.

Earlier in the day, the peso had weakened after U.S. inflation data came in above expectations, alongside a downgrade in Mexico’s sovereign debt outlook by S&P Global.

The exchange rate closed at 17.1807 pesos per dollar, compared with 17.2228 in the previous session, according to Banco de México. This represents a gain of 4.21 centavos, or 0.24%.

During the session, the peso traded between a high of 17.2530 and a low of 17.1651. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.20% to 98.49 points.

The 17.20 level remains a short-term technical pivot, given the sideways range observed over the last six sessions, while key support is seen at the yearly low of 17.08.

Trump–Xi meeting in focus

Markets remain focused on the high-profile meeting between Trump and Xi in Beijing, with investors watching closely for signals on trade relations between the world’s two largest economies. Broader geopolitical risks, including the conflict in the Middle East and tensions over Taiwan, are also part of the backdrop.

Reports indicate Trump arrived in Beijing accompanied by prominent business leaders, including Elon Musk and Larry Fink.

U.S. inflation adds pressure to markets

Markets also adjusted expectations after U.S. producer price data showed the largest monthly increase in four years. The Producer Price Index (PPI) rose 1.4% in April, following a revised 0.7% increase in March.

As a result, expectations for a Federal Reserve rate cut this year have declined, according to CME’s FedWatch tool. In contrast, bets on potential rate hikes have begun to reappear.

Domestic headwinds add pressure

Separately, S&P Global revised Mexico’s sovereign credit outlook from “stable” to “negative,” increasing the risk premium on Mexican assets. Finance Minister Edgar Amador said government measures would help reverse the decision over time.