Puerto Vallarta, Mexico – The Mexican peso extended its advance against the dollar in mid-week trading, buoyed by calmer global risk sentiment after U.S. President Donald Trump said he has “no intention” of dismissing Federal Reserve Chair Jerome Powell and struck a conciliatory tone on trade negotiations with China.
The spot rate strengthened 0.42 percent to 19.5696 pesos per dollar, according to Bank of Mexico (Banxico) data, moving well away from Tuesday’s official close of 19.6530. During the session the currency oscillated between a low of 19.4695 and a high of 19.6576, edging closer to the psychologically important MXN 19.50 support.
The broader greenback was mixed: the Intercontinental Exchange’s Dollar Index (DXY), which pits the U.S. currency against six major peers, rose 0.55 percent to 99.52, reflecting dollar strength elsewhere even as high-beta currencies such as the peso found support.
Relief After Fed Row
Investors had grown uneasy after several reports suggested the White House was exploring legal avenues to demote or remove Powell over the Fed’s decision to hold interest rates steady. On Tuesday night, however, Trump told reporters he did not plan to fire the central-bank chief—despite again blaming him for the risk of a future U.S. slowdown and labeling him a “loser” on social media.
The clarification “removed an immediate tail-risk around the Fed’s independence,” said Renato Campos, analyst at Squared Financial. “With that political cloud partly dispersed, higher-yielding assets were quick to recover.”
Optimism on Trade Front
Sentiment was further underpinned by hopes that Washington and Beijing are closing in on a deal to end their protracted tariff dispute. Trump said he would take a “friendly” approach in the next round of talks, kindling appetite for emerging-market currencies.
“The peso is extending its weekly appreciation, aiming to break 19.50 on renewed optimism over U.S.–China negotiations,” brokerage Monex wrote in a note. “Comments from U.S. officials have helped re-ignite risk appetite.”
Domestic Picture: Solid but Slowing
On the home front, February retail sales logged a fourth consecutive month of growth but undershot market forecasts, rising modestly on the month while falling 1.1 percent year-on-year. The softer print reinforced expectations that Banxico will push ahead with monetary easing.
A Citibanamex survey published late Tuesday showed an almost unanimous call for a 50-basis-point cut at Banxico’s May meeting, taking the policy rate to 8.50 percent. Lower local rates typically temper a currency’s carry appeal, but traders said the peso was drawing comfort from Mexico’s still-resilient macro indicators relative to emerging-market peers.
Outlook
With global focus fixed on both the Fed’s next moves and the trajectory of the U.S.–China talks, analysts expect the peso to remain sensitive to headlines. A decisive break below 19.50 could open the door to the 19.30–19.20 zone, strategists said, although a rebound in dollar strength or a souring of trade negotiations could swiftly reverse the move.
“For now, the exchange rate is reacting more to the possibility of a U.S. slowdown and to Banxico’s forthcoming cuts than to any deterioration in Mexican fundamentals,” Campos added. “If external risks continue to recede, the peso has room to grind stronger in the near term.”
Puerto Vallarta, Mexico - The Mexican peso extended its advance against the dollar in mid-week trading, buoyed by calmer global risk sentiment after U . . .
