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).
Market Performance
- 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.
- The dollar’s price fluctuated between a high of 18.4651 pesos and a low of 18.3819 pesos.
- The Dollar Index (DXY) dropped 0.09% to 98.73 units, comparing the US dollar with six major currencies.
Anticipation of Policy Announcements
Traders are gearing up for a series of policy announcements, including one from the Fed. According to CME’s FedWatch tool, there is nearly a 100% probability that the Fed will lower its reference interest rate by 25 basis points.
Geopolitical Focus
Market attention is also on the meeting between US President Donald Trump and Chinese President Xi Jinping in South Korea on Thursday. The leaders aim to reach a broad agreement to alleviate recent trade tensions.
Expert Analysis
“The market continues to favor Mexico due to its interest rate differential and close trade ties with the United States, although bilateral political factors and the global dollar’s evolution will continue to shape exchange rate movements,” said Felipe Mendoza, analyst at ATFX Latam.
“Looking ahead to overnight, we predict a range of 18.39 to 18.46 pesos per dollar, considering the dollar’s retreat but the strength of the yen, which is correlated with carry trade strategies involving pesos, pending the Fed’s policy announcement,” said Monex Grupo Financiero.
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 rose to 3.0% in September, its 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 the upcoming policy announcements that traders are anticipating? Traders are preparing for various central bank policy announcements, including a potential interest rate cut by the Federal Reserve.
- Why are markets watching the meeting between US President Donald Trump and Chinese President Xi Jinping? The leaders aim to reach a broad agreement to alleviate recent trade tensions.
- What are the recent local economic indicators in Mexico? The seasonally adjusted unemployment rate in Mexico increased to 3.0% in September, the highest level since August 2024.
