The Mexican peso closed at 19.4669 per dollar on Friday, up 0.36% amid improved sentiment on trade prospects ahead of high-level US–China talks. Analysts eye further gains ahead of Banxico’s rate decision next week.
Puerto Vallarta, Mexico – The Mexican peso appreciated against the US dollar in trading on Friday, closing at 19.4669 pesos per dollar, buoyed by improved market sentiment on trade prospects ahead of a planned meeting between senior US and Chinese officials in Switzerland. According to data released by the Bank of Mexico (Banxico), the peso’s gain of 7.04 cents, or 0.36%, marked a notable recovery from Thursday’s close of 19.5373.
Trading ranged between a session high of 19.5476 and a low of 19.4706 as investors digested a mix of geopolitical developments and data on global trade. At the same time, the Intercontinental Exchange’s Dollar Index (DXY)—which measures the dollar against a basket of six major currencies—fell 0.29% to 100.35 points, reflecting broader dollar weakness amid hopes for progress in US–China negotiations.
Trade Optimism Drives Gains
Market participants cited renewed optimism on trade after US President Donald Trump signaled a willingness to reduce tariffs on Chinese goods. In remarks ahead of the talks, President Trump said that an 80% tariff rate “seems right,” offering the first specific alternative to the current 145% levies imposed on certain Chinese imports. Trump’s comments increased expectations that both sides may reach a compromise that avoids further escalation in the world’s two largest economies.
Adding to the positive mood, Reuters reported that India has offered to narrow its tariff gap with the United States from 13% to under 4%, in exchange for an exemption from both current and potential US tariff hikes. Such developments suggest that Washington may be open to bilateral concessions designed to placate trading partners and stabilize global markets.
In a related announcement, President Trump and British Prime Minister Keir Starmer declared yesterday that they have reached a “grand deal” on trade—the first formal agreement since the imposition of steep global import taxes earlier this year. While details remain sparse, analysts believe this deal could set a template for future trade pacts, further underpinning risk appetite in the currency markets.
Weekly Performance and Banxico Outlook
Over the course of the week, the peso registered a cumulative improvement, reflecting its resilience amid rising local inflation. Despite elevated consumer prices, traders have largely priced in expectations that Banxico will continue to ease monetary policy. Economists anticipate that on June 12, Banxico will deliver its fourth consecutive rate cut, reducing the benchmark overnight rate by 25 basis points to 10.25%.
From the close of 19.5985 pesos per dollar last Friday, the currency has appreciated by 13.16 cents, or 0.67%, over the past five trading sessions. Further upside may depend on the outcomes of the upcoming US–China discussions, as well as domestic macroeconomic indicators, including next week’s release of Mexico’s monthly consumer price index.
Technical and Fundamental Trends
Renato Campos Santana, an analyst at Squared Financial, noted that the peso-dollar pair is “threatening the support of the sideways trading range at 19.47, with resistance at 19.76. Given the bearish momentum and fundamental background, the probability of a fall tends to be higher.” Campos Santana highlighted that a sustained break below 19.47 could prompt additional speculative buying of pesos, pushing the currency toward the lower end of its range for the year.
Analysts point out that the peso’s performance often hinges on the interplay between global risk sentiment and domestic policy. In recent months, the currency has responded favorably to shifts in US monetary policy expectations, while remaining vulnerable to spikes in geopolitical tensions. A delayed or inconclusive outcome from the Switzerland talks could introduce volatility, whereas a breakthrough may reinforce the peso’s advance.
Global Context and Investor Positioning
International investors have been reevaluating their dollar exposures amid signs that the US Federal Reserve could pause its rate hiking cycle. Comments from Fed officials this week suggested a more cautious approach to future rate increases, reinforcing the dollar’s recent slide. In turn, this has supported emerging market currencies, including the peso, which tends to benefit when global funding conditions ease and risk assets rally.
The Mexican currency’s gains have also been underpinned by strong local demand for foreign exchange hedges. Corporations and institutional investors have added peso options to their portfolios, anticipating that Banxico’s potential rate cuts will narrow interest rate differentials with the United States. Should inflation remain elevated, however, the central bank may be forced to reconsider its easing path, which could weigh on the peso.
Looking Ahead
Traders will be closely watching the outcome of the US–China meeting in Geneva tomorrow, where senior trade officials aim to lay the groundwork for higher-level discussions between President Trump and China’s leadership. Any sign of compromise on tariffs or a commitment to further dialogue could drive the peso stronger, while a stalemate may prompt investors to hedge their positions.
Domestically, next week’s releases of Mexico’s consumer price index and Banxico’s rate decision will be critical. Analysts predict inflation rose by 0.4% in April, pushing the annual rate above 4%. If the inflation surprise is larger than expected, the central bank may opt to pause rate cuts, supporting the peso’s value. Conversely, a softer inflation print could embolden Banxico to reduce rates again, potentially dampening peso strength.
For now, the peso’s recent gains reflect a delicate balance of global and local factors. While improved trade prospects have provided a near-term boost, the currency remains sensitive to changes in US policy and Mexico’s own inflation dynamics. Investors will need to navigate a busy calendar of data and diplomacy to determine the peso’s next directional move.
The Mexican peso closed at 19.4669 per dollar on Friday, up 0.36% amid improved sentiment on trade prospects ahead of . . .
