The Mexican peso gains ground in Wednesday’s session, strengthening on bets that the US Federal Reserve will cut interest rates later this year. Traders also positioned ahead of July’s local inflation report and the Bank of Mexico’s monetary policy decision scheduled for tomorrow.
Mexican peso gains ground
The spot exchange rate closed at 18.6142 pesos per dollar, improving from yesterday’s 18.7378 level. That shift marked a gain of 12.36 cents, or 0.66 percent, according to Banxico data. The dollar peaked at 18.7447 and dipped to 18.5817 during the session, reflecting heightened volatility in currency markets.
The Intercontinental Exchange’s Dollar Index (DXY), which tracks the greenback against six major currencies, slid 0.54 percent to 98.23 points. A softer dollar bolstered emerging-market currencies, with the peso among the best performers in the region.
Market participants now price in a 93.2 percent chance of a Fed rate cut in September, according to CME Group’s Fed Watch tool. Expectations for looser US monetary policy have underpinned demand for higher-yielding assets, drawing capital flows toward Mexico’s local currency.
Investors are also awaiting the release of July’s consumer price index tomorrow. Analysts widely expect Banxico to moderate its recent pace of easing to a 25-basis-point reduction. That would follow four consecutive 50-basis-point cuts, as authorities balance inflation risks against slowing growth.
Juan Carlos Cruz Tapia, a financial consultant, noted that a return to the peso’s 18.7300 zone — where weekly volumes peak — remains possible. He identified immediate support at 18.60 and 18.50 pesos per dollar. “Traders will closely watch tomorrow’s data and Banxico’s statement for clues on the next move,” Cruz Tapia said.
Trade dynamics have emerged as a key driver of the dollar’s weakness. Cruz Tapia pointed to comments by former US President Donald Trump on potential tariff hikes for buyers of Russian oil. “This time, the main catalyst is the trade outlook,” he added, linking geopolitical risks to currency shifts.
As markets position for tomorrow’s Banxico meeting, the peso’s midweek strength underscores growing confidence in Mexico’s rate-cut cycle. The central bank’s decision could set the tone for the peso’s trajectory in the weeks ahead, as global investors weigh US policy moves against domestic inflation trends.
