Mexican Peso trades higher in major pairs at start of week


  • The Mexican Peso gains against rivals on Monday. 
  • The week ahead promises to be busy for traders of the Peso’s key counterparts, given scheduled events and data.
  • USD/MXN extends its steady climb within a rising channel. 

The Mexican Peso (MXN) rises in its key pairs on Monday after falling an average of 1.5% last week. The Peso is seeing gains against the Euro (EUR) after the release of below-expectations German inflation data indicated the bloc's largest economy might be at risk of a more protracted slowdown than previously thought. The Peso is also making gains against the US Dollar (USD) and the Pound (GBP) amidst a general sell-off in financial markets during the European and the start of the US sessions. 

The Bank of Mexico’s (Banxico) decision to cut interest rates by 25 basis points (0.25%) at its September meeting on Thursday, bringing the official cash rate down to 10.50%, as well as a downward revision to its forecasts for the economy, contributed to the Peso’s devaluation last week.  

Data showing a widening trade deficit added to the negativity surrounding the Mexican Peso after official figures showed it widened to $4.868 billion in August from $1.278 billion a year ago. These figures significantly exceeded market expectations of a $0.500 billion gap and reached a new two-year high. 

The proximity of the United States (US) election and prospects of former President Donald Trump winning and then imposing an “America First” agenda, with negative implications for trade with Mexico, further add to the concerns regarding Mexico’s persistent trade deficit, which amounts to $10.438 billion for the first eight months of 2024.

Mexican Peso traders prepare for data-heavy week

The Mexican Peso recovers on Monday ahead of a busy week of macroeconomic data releases and key events for its major peers – the US Dollar (USD), Euro (EUR) and Pound Sterling (GBP). 

On Monday, speeches by European Central Bank (ECB) President Christine Lagarde and Chairman of the Federal Reserve (Fed) Jerome Powell could impact the EUR and USD, respectively. Recent weak data from the Eurozone, in particular, is leading to speculation in markets that the ECB will have to be more aggressive about cutting interest rates to aid growth, potentially weakening the Euro. In Mexico, Fiscal Balance data for August will be released, revealing the government’s spending shortfall.  

On Tuesday, preliminary Eurozone inflation data for September, and then the Nonfarm Payrolls (NFP) on Friday, are further key data releases relating to key Peso pairs. The NFP release will be watched closely for signs of a slowdown in the labor market after the Fed made it clear it is now taking into account its mandate to provide full employment as part of its decision-making on interest rates. 

Technical Analysis: USD/MXN trends higher within channel

USD/MXN pauses as it climbs steadily higher within its rising channel, continuing its short, medium and long-term bullish trends. 

USD/MXN Daily Chart 

 

Friday’s close above 19.68 (September 25 high) provided more bullish certainty of the pair’s near-term upside bias towards a target at 20.15, the high of the year reached in early September.

A further break above 19.76 (the September 27 high) would create a higher high and provide yet more proof of an extension of the uptrend.

Economic Indicator

Central Bank Interest Rate

The Bank of Mexico announces a key interest rate which affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers.  Generally speaking, if the central bank is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the Mexican Peso.

Read more.

Last release: Thu Sep 26, 2024 19:00

Frequency: Irregular

Actual: 10.5%

Consensus: 10.5%

Previous: 10.75%

Source: Banxico

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD retreats toward 1.0850 despite weak US employment data

EUR/USD retreats toward 1.0850 despite weak US employment data

EUR/USD loses its traction and declines toward 1.0850 after testing 1.0900 earlier in the session. Because Nonfarm Payrolls data for October missed the market expectation by a wide margin due to hurricanes and strikes, the US Dollar manages to hold its ground.

EUR/USD News
GBP/USD climbs above 1.2950, looks to end week little changed

GBP/USD climbs above 1.2950, looks to end week little changed

GBP/USD benefits from the improving risk mood and trades in positive territory above 1.2950 in the American session on Friday as markets ignore the weak labor market data from the US. The pair remains on track to end the week flat.

GBP/USD News
Gold clings to small gains near $2,750 after US data

Gold clings to small gains near $2,750 after US data

Gold clings to marginal recovery gains and trades slightly above $2,750. The 10-year US Treasury bond yield struggles to push higher after the dismal October jobs report and weaker-than-expected PMI data from the US, helping XAU/USD keep it footing.

Gold News
Bitcoin Weekly Forecast: Run toward fresh all-time high hinges on US presidential election results

Bitcoin Weekly Forecast: Run toward fresh all-time high hinges on US presidential election results

Bitcoin could experience a price pullback in the next few days ahead of the US presidential election, analysts say, an event that will be key to determining whether and how the crypto class will be regulated in the years to come.

Read more
Bank of Japan holds rates steady amid signs of modest GDP growth

Bank of Japan holds rates steady amid signs of modest GDP growth

Monthly industrial production results have been mixed but generally indicate a modest recovery in third-quarter GDP. Clear guidance from the Bank of Japan remains elusive, with each upcoming meeting being pivotal.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Forex MAJORS

Cryptocurrencies

Signatures