Quick overview

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Geopolitical tensions and shifting expectations for U.S. interest rates pushed the Mexican peso lower this week, as investors sought safety in the dollar amid rising global uncertainty.

The Mexican currency weakened against the U.S. dollar on Friday, ending the week with cumulative losses after President Donald Trump concluded his visit to China without major announcements.

The exchange rate closed the session at 17.3428 pesos per dollar. Compared with Thursday’s official close of 17.2281, according to Bank of Mexico data, the peso lost 11.47 centavos, or 0.67%.

During the session, the dollar traded between a high of 17.4028 pesos and a low of 17.2311. Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, rose 0.49% to 99.30 points.

Higher U.S. inflation and oil prices pressure currencies

Economic data released this week showed that inflation in the United States remains elevated, supported by resilient economic activity and higher oil prices linked to the conflict in the Middle East.

As a result, the dollar posted its strongest weekly gain in two months, while traders sharply adjusted expectations for Federal Reserve policy.

According to CME’s FedWatch tool, markets have now largely ruled out the possibility of a Fed rate cut this year. Instead, traders are beginning to price in a 25-basis-point rate hike in December, currently carrying an implied probability of 38%.

At the same time, Trump’s trip to China ended without meaningful progress regarding the conflict in the Middle East. Upon returning to Washington, the president warned that he was “running out of patience” with Iran, further fueling market concerns.

Oil prices extended their rally, with WTI crude futures climbing more than 4% to trade above $105 per barrel.

Peso posts weekly losses as risk aversion rises

On a weekly basis, the peso lost 14.94 centavos, or 0.87%, compared with last Friday’s close of 17.1934 per dollar.

Analysts noted that growing geopolitical uncertainty and expectations of higher U.S. interest rates continue to support the dollar’s safe-haven appeal.

Market participants are now awaiting the release of minutes from both the Federal Reserve and the Bank of Mexico for additional clues on the future path of monetary policy.

In the near term, traders expect the exchange rate to consolidate within the 17.35–17.50 range if global risk aversion persists, with the peso likely to remain under pressure as the dollar regains momentum as a defensive asset.