Mexico’s Peso Stays On Course as Traders Keep a Close Eye on U.S. & Mexican Data
Why the Peso is Holding Its Ground
At the end of the week, the Mexican peso didn’t throw a curveball. It hung around the same tight range it’s been trading in, signalling that investors are treading cautiously. The nervousness is mainly because two big economies— the United States and Mexico—just pumped out some fresh data, and trade headlines are still moving slowly.
U.S. Job Numbers Serve as a Blessing For the Peso
The U.S. released February’s employment data: 151,000 new jobs, a little shy of the 160,000 market had hoped for, and the unemployment rate nudged up to 4.1%. Lower job growth and a higher unemployment rate give the Federal Reserve a bit of breathing room to adopt a softer, or dovish, stance in its next policy meeting. That in turn could keep the Mexican peso’s value from wobbling wildly.
Trump’s Tariff Move Helps Mexico’s Trade Muscle
- Major relief: Former President Donald Trump extended tariff exemptions for Mexico and Canada for another month.
- It gives the peso a much-needed boost, since stable trade between Mexico and its biggest partner, the U.S., is critical for Mexico’s economic health.
Mexico’s Inflation Picture for February
Inflation on a whole‑body basis was 3.77% in February, a touch higher than the 3.59% seen in January but still neatly tucked within the Banco de México (Banxico)’s target range. That’s good news, but the details paint a more nuanced story.
- Core inflation jumped 0.48% month‑over‑month, mainly driven by food and services costs.
- The non‑core side fell 0.39% month‑over‑month, even though its annualised rate climbed to 4.08%. This signals that Banxico still faces real challenges in managing the economy.
What Banxico’s Moves Mean for the Peso
In the medium term, Banxico’s monetary policy moves could swing the peso either way. If the central bank keeps slashing rates aggressively, the peso may see a downward pull. However, if it steadies its approach, we’ll likely see the currency hold its current footing.
Next Week’s Key Numbers: What to Watch
Markets are sharpening their focus on Mexico’s consumer confidence and industrial production data next week. A strong show in these figures could give the peso a bit of extra muscle, while a lackluster read might keep its gains in check.
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