Overview
The Mexican peso weakened against the US dollar on Tuesday, as traders anticipated policy announcements from various central banks, including the Federal Reserve (Fed). The exchange rate ended the day at 18.4315 pesos per dollar, a decrease of 0.19% or 3.54 centavos compared to Monday’s closing rate of 18.3961 pesos per dollar, according to official data from Banco de México (Banxico).
Market Focus
The US dollar’s movement ranged from a high of 18.4651 pesos to a low of 18.3819 pesos, while the Dollar Index (DXY) from the Intercontinental Exchange fell 0.09% to 98.73 units.
Anticipation of Policy Announcements
Traders are preparing for a series of policy announcements, including one from the Fed. According to CME’s FedWatch tool, there is nearly 100% probability that the Fed will reduce its reference interest rate by 25 basis points.
Geopolitical Developments
Market attention was also on the meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday in South Korea, aiming to reach a broad agreement to alleviate recent trade tensions.
Expert Analysis
Felipe Mendoza, an analyst at ATFX Latam, stated: “The market continues to favor Mexico due to its interest rate differential and proximity to the US market, although bilateral political factors and the global dollar’s evolution will continue to shape the peso’s exchange rate.”
Monex Grupo Financiero added: “Looking ahead to overnight, we predict a range of 18.39 to 18.46 pesos per dollar, considering the dollar’s retreat but the yen’s strength, which is correlated with carry trade strategies involving pesos, pending the Fed’s policy announcement.”
Local Economic Indicators
On the domestic front, Tuesday’s session was marked by the release of data showing that Mexico’s seasonally adjusted unemployment rate increased to 3.0% in September, the highest level since August 2024.
Key Questions and Answers
- What is the current state of the Mexican peso against the US dollar? The Mexican peso weakened against the US dollar on Tuesday, closing at 18.4315 pesos per dollar.
- What are traders anticipating? Traders are preparing for policy announcements from various central banks, including a potential interest rate cut by the Federal Reserve.
- What geopolitical event is capturing market attention? The meeting between US President Donald Trump and Chinese President Xi Jinping on Thursday in South Korea, aiming to address trade tensions.
- What are the recent local economic indicators? Mexico’s seasonally adjusted unemployment rate increased to 3.0% in September, the highest level since August 2024.
