Puerto Vallarta, Mexico – The Mexican peso weakened against the U.S. dollar on Tuesday amid a global rise in the greenback, as markets prepared for the outcome of the U.S. Federal Reserve’s two-day monetary policy meeting and digested disappointing retail sales data out of Mexico.
The peso was trading at 20.26 per U.S. dollar in afternoon dealings, down from the previous day’s LSEG reference of 20.13. The local currency’s performance was influenced by the release of retail sales figures that showed a surprising contraction in October.
According to official data, retail sales in Mexico declined by 0.3% in October from the previous month, marking the sector’s weakest reading since June. The figure ran counter to economist expectations, which had forecast a 0.2% increase. The negative result raised concerns about domestic demand and economic momentum heading into the final quarter of the year.
Meanwhile, attention has shifted to the United States, where the Federal Reserve’s monetary policy meeting is expected to conclude on Wednesday. Market analysts widely anticipate a quarter-point interest rate reduction, as the Fed continues to navigate global uncertainties. While this cut may provide some support to emerging market currencies, including the peso, expectations are that the U.S. central bank will proceed with caution, easing rates gradually over the coming year rather than implementing more aggressive measures.
Investors will continue to monitor economic indicators and central bank decisions, both in Mexico and internationally, to assess the trajectory of monetary policy and its impact on currency markets as 2024 approaches.
