The USD/MXN has fallen over 2.5% in the past five trading sessions, dropping below 19.9 per USD for the first time since November 2024.
Two key factors could be driving this move:
1.
Investor distrust in the U.S. dollar – Market confidence is weakening due to Trump’s inconsistent tariff threats and other unpopular policies.
In contrast, the Sheinbaum government’s kid-glove handling of Trump is securing favourable trade concessions.
2.
Attractive interest rate differential – With Banxico’s benchmark rate at 9.5%, the peso remains appealing for carry trades.
The Federal Reserve’s decision this week could widen this gap further. Last week’s subdued U.S. inflation data is helping to fuel speculation of earlier Fed rate cuts, which may continue to support the peso despite trade uncertainties.
Two key factors could be driving this move:
1.
Investor distrust in the U.S. dollar – Market confidence is weakening due to Trump’s inconsistent tariff threats and other unpopular policies.
In contrast, the Sheinbaum government’s kid-glove handling of Trump is securing favourable trade concessions.
2.
Attractive interest rate differential – With Banxico’s benchmark rate at 9.5%, the peso remains appealing for carry trades.
The Federal Reserve’s decision this week could widen this gap further. Last week’s subdued U.S. inflation data is helping to fuel speculation of earlier Fed rate cuts, which may continue to support the peso despite trade uncertainties.
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Economic Calendar:
blackbull.com/en/economic-calendar/?utm_source=tradingview
Free TradingView Premium:
blackbull.com/en/platforms/tradingview/?utm_source=tradingview
blackbull.com/en/economic-calendar/?utm_source=tradingview
Free TradingView Premium:
blackbull.com/en/platforms/tradingview/?utm_source=tradingview
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.