Background on Key Figures and Context
Felipe Mendoza, a financial market analyst at ATFX LATAM, plays a crucial role in understanding the recent movements of the Mexican peso against the US dollar. His insights are essential for interpreting the factors influencing currency fluctuations.
Mexican Peso’s Recent Performance
On the closing day of Friday’s trading, the Mexican peso regained ground against the US dollar, reaching a new yearly low. This development comes amidst growing expectations that the Federal Reserve (Fed) will soon start reducing interest rates.
- Official Data from Banco de México (Banxico): The exchange rate closed the day at 18.4483 pesos per US dollar, marking an appreciation of 3.45 centavos, or 0.19%, compared to the previous day’s closing.
- Weekly Performance: The peso recorded a new low against the greenback and concluded the week with an appreciation of 26.60 centavos, or 1.42%. This performance broke a two-week losing streak and continues to hover at levels unseen since July 2024.
Market Analyst’s Outlook
According to Felipe Mendoza, the upcoming Fed decision and evolving speculations about the US dollar will condition the peso’s movement in the coming days. He anticipates the exchange rate to fluctuate between 18.40 and 18.60 pesos per US dollar.
US Dollar Index and Economic Data
The Intercontinental Exchange’s dollar index (DXY), which measures the US dollar against a basket of six currencies, increased by 0.10% to 97.63 points.
This week’s US economic data releases also played a significant role in emerging currencies, like the Mexican peso, gaining ground against the US dollar.
Fed Policy and Market Speculation
With the Fed’s policy decision looming, investors are closely monitoring the possibility of interest rate cuts by year-end. Analysts from Grupo Financiero BX+ highlighted that recent inflation and employment figures in the US have given certainty that the Fed will reduce the target range for federal funds in the coming week.
“Now, the market is debating the magnitude of adjustments to interest rates for the upcoming months,” they added.
Key Questions and Answers
- What is the recent performance of the Mexican peso against the US dollar? The Mexican peso strengthened against the US dollar, closing at a new yearly low of 18.4483 pesos per US dollar, after appreciating by 3.45 centavos or 0.19%.
- Why is the Mexican peso gaining ground? Growing expectations of the Federal Reserve reducing interest rates and favorable US economic data have contributed to the Mexican peso’s recent appreciation against the US dollar.
- What role do analysts play in interpreting currency movements? Financial market analysts, like Felipe Mendoza from ATFX LATAM, provide crucial insights into factors influencing currency fluctuations and help predict future movements.
- How does the US dollar index impact emerging currencies? The Intercontinental Exchange’s dollar index measures the US dollar against a basket of six currencies. An increase in this index generally weakens emerging currencies, while a decrease can strengthen them.
