The Mexican Peso showed strength against the US Dollar on Friday, gaining over 0.90% before erasing its gains. This movement was influenced by US economic data, which supported the Federal Reserve’s gradual approach to easing policy. The USD/MXN trades at 19.85, up by 0.20%, as the Greenback hit a two-month high against a basket of six currencies.
Wall Street saw gains on Thursday following positive US Retail Sales and unemployment claims reports. The Greenback hit a high of 103.87 on the US Dollar Index before retreating to 103.48. Economic data released during the week included Building Permits and Housing Starts for September, showing a deterioration compared to August figures.
The Mexican Peso initially gained due to China’s stimulus measures aimed at boosting the economy, but gains were short-lived as the Fed is expected to lower interest rates by 25 basis points at the November meeting. The USD/MXN surged past 19.90 earlier in the week, reaching a five-week low. The International Monetary Fund projected slower economic growth for Mexico in 2024 and 2025, with an estimated GDP growth of 1.5% and 1.3%, respectively.
On the technical front, the USD/MXN is upwardly biased, with the Relative Strength Index indicating bullish momentum. Resistance levels for the exchange rate are set at 20.02 and 20.22, while support levels are at 19.64 and 19.61. Further weakness could see the USD/MXN testing the 19.10 and 19.00 levels.
The value of the Mexican Peso is influenced by various factors including the performance of the Mexican economy, central bank policies, foreign investment, remittances, and geopolitical trends. Banxico’s main objective is to maintain low and stable inflation levels through appropriate interest rate adjustments. Macroeconomic data releases play a vital role in assessing the state of the economy and can impact the MXN valuation. As an emerging market currency, the Mexican Peso tends to perform well during risk-on periods and weakens during times of market turbulence or uncertainty. Overall, the Mexican Peso is a key currency in the Latin American region and is closely monitored by investors worldwide.
