Market Monitors Israel-Iran Conflict and Awaits Fed Decision
The Mexican peso has gained marginal ground against the US dollar on Wednesday, as traders keep a close eye on the ongoing conflict between Israel and Iran while awaiting the Federal Reserve’s monetary policy decision.
Current Exchange Rate
The spot exchange rate is currently at 19.0045 pesos per dollar, marking a gain of one cent—equivalent to 0.05%—compared to Tuesday’s official closing rate of 19.0145 pesos, according to data from Banco de México (Banxico).
The dollar’s price fluctuates between a high of 19.0219 pesos and a low of 18.9436 pesos. Meanwhile, the Intercontinental Exchange’s Dollar Index (DXY) falls 0.14% to 98.69 points, comparing the US currency with six other currencies.
Anticipation of Fed Announcement
Investors expect the US Federal Reserve to keep its benchmark interest rate unchanged on Wednesday. However, they will closely watch the Fed’s statement, President Jerome Powell’s speech, and any updates to their projections.
“We anticipate that the US Federal Reserve will maintain its target rate within the 4.25% to 4.50% range, without any changes,” said analysts from Banamex in a report to their clients.
Decreasing Risk Aversion
The peso weakened on Tuesday, falling below the 19-per-dollar mark following US President Donald Trump’s early departure from the G7 summit and his messages on social media demanding Iran’s surrender.
“Today, the Mexican peso benefits from reduced anxiety surrounding the geopolitical conflict in the Middle East, as rumors of escalation during the night have subsided,” explained analysts from Monex Grupo Financiero in a report.
Local Interest Rates Expected to Decrease
On the domestic front, Banco de México will reveal its monetary policy decision next week, and the market anticipates a half-percentage point cut, similar to its previous decision that also adjusted rates by 50 basis points.
Key Questions and Answers
- What is the current status of the Mexican peso against the US dollar? The Mexican peso has gained marginal ground, trading at 19.0045 against the dollar, after a slight improvement following reduced tensions in the Middle East.
- What is the expected outcome of the US Federal Reserve’s monetary policy decision? Analysts predict that the Fed will keep its benchmark interest rate unchanged, focusing on the accompanying statement and projection updates from President Jerome Powell.
- Why did the peso weaken on Tuesday? The peso depreciated due to heightened concerns over the Israel-Iran conflict after US President Donald Trump’s early departure from the G7 summit and his demands for Iran’s surrender on social media.
- What is the anticipated action by Banco de México regarding interest rates? The market expects Banco de México to cut local interest rates by half a percentage point, following its previous adjustment of 50 basis points.
