Background on the Mexican Economy and Key Figures
The Mexican peso is currently weakening against the US dollar, following a three-day winning streak that saw gains of over 1% and pushed the currency to its highest level since mid-October. This shift comes as investors display caution, awaiting updates on US trade negotiations with its partners and the stalled progress of President Donald Trump‘s controversial tax reform bill in Congress.
Current Exchange Rate and Market Trends
The spot exchange rate is currently at 19.3389 pesos per dollar, marking a decrease of 6.32 centavos (0.33%) compared to the previous day’s official closing rate of 19.2757 pesos, according to data from Mexico’s central bank, Banxico. The dollar’s value fluctuates between a high of 19.3760 pesos and a low of 19.2593 pesos.
The DXY Index, which compares the US dollar to six reference currencies from the Intercontinental Exchange, is down by 0.52% at 99.51 units.
Market Uncertainty and Local Economic Indicators
The market’s uncertainty stems from traders’ cautious approach as they await information on US trade discussions with its partners and the ongoing stalemate in Congress regarding President Trump’s tax reform proposal.
In local news, Mexico’s GDP and inflation figures are expected to be released tomorrow. This comes a week after the Bank of Mexico reduced its key interest rate by half a percentage point, warning that further reductions of similar magnitude could be considered.
Expert Analysis and Recommendations
Banorte, a prominent Mexican financial institution, anticipates a technical rebound for the peso. They suggest that the currency will likely respect support at 19.24 and aim for resistance around 19.38, with subsequent support at 19.46. Banorte recommends increasing positions in the peso.
Key Questions and Answers
- Q: Why is the Mexican peso weakening against the US dollar? A: The peso is weakening due to market uncertainty surrounding US trade negotiations and the stalled progress of President Trump’s tax reform bill.
- Q: What are the current exchange rate and market trends? A: The spot exchange rate is 19.3389 pesos per dollar, a decrease of 0.33% from the previous day. The US dollar is fluctuating between 19.3760 and 19.2593 pesos.
- Q: How is the DXY Index performing? A: The DXY Index, which measures the US dollar’s strength against six major currencies, is down by 0.52% at 99.51 units.
- Q: What local economic indicators are upcoming? A: Mexico’s GDP and inflation figures will be released tomorrow, following the Bank of Mexico’s recent half-percentage point interest rate cut.
- Q: What are Banorte’s recommendations for trading the Mexican peso? A: Banorte advises traders to expect a technical rebound, respecting support at 19.24 and targeting resistance at 19.38, with further support at 19.46. They recommend increasing positions in the peso.
