Puerto Vallarta, Mexico – The Mexican peso appreciated slightly against the U.S. dollar on Thursday morning, advancing despite a decline in the greenback as investors digested key Gross Domestic Product (GDP) data from both Mexico and the United States.
The peso stood at 20.5037 per dollar in the spot market, reflecting a 3.33-cent or 0.16% gain from the previous official close of 20.5370 units, according to data from the Bank of Mexico (Banxico).
The dollar traded within a range between a high of 20.5465 and a low of 20.4425 pesos. Meanwhile, the Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell 0.20% to 107.73 points.
The dollar’s weakening was attributed to declining Treasury yields following disappointing GDP data in the U.S. The economy grew at an annualized rate of 2.3% in the fourth quarter of 2024, missing market forecasts, according to the first estimate released on Thursday.
The softer-than-expected economic growth is fueling concerns over the U.S. economic outlook, leading to a more cautious approach by investors toward the dollar.
On the domestic front, Mexico’s GDP contracted by 0.6% during the fourth quarter of 2024, marking the country’s first quarterly decline in over three years and surpassing the market consensus of a 0.2% drop.
“The GDP data places the country close to a recession; the slowdown is expected to continue,” analysts from Banco Base stated.
The decline in economic activity poses a significant challenge for policymakers as they attempt to balance growth and inflation concerns amid global economic uncertainty.
Despite the peso’s modest gains, market analysts predict continued fluctuation in the exchange rate. Vector Análisis noted in a research note that the peso-dollar pair “has moderated its movements, limiting the decline to the support zone at 20.45-20.40, with rebounds potentially capped at 20.65-20.70.”
The analysts highlighted lateral movements in technical indicators, which support continued volatility within this trading range.
As both economies face challenges, investor sentiment remains cautious, with traders keeping a close watch on central bank actions and further economic indicators in the coming weeks.
Puerto Vallarta, Mexico - The Mexican peso appreciated slightly against the U.S. dollar on Thursday morning, advancing despite a decline in the greenback as investors digested key Gross Domestic Product (GDP) data from both Mexico and the United States.
The peso stood at 20.5037 per dollar in the spot market, reflecting a 3.33-cent or 0.16% gain from the previous official close of 20.5370 units, according to data from the Bank of Mexico (Banxico).
