USD MXN

After a long session of indecision in USD/MXN movements, during which the pair surged by more than 4%, the Mexican peso has managed to recover nearly all of its losses and remains in a neutral zone against the U.S. dollar.

Will we see progress toward a tariff truce today? USD/CAD and USD/MXN traders seem to think it's possible.

The Trump administration has officially confirmed that new tariffs will take effect on Saturday, February 1, including a 25% tariff on imports from Canada and Mexico and a 10% tariff on Chinese goods - see how it's impacting markets.

It has been a challenging start to the week for the Mexican peso, as USD/MXN has risen by more than 1.5%, favoring the U.S. dollar in the short term.

Over the past three sessions, USD/MXN declined by more than 2%, benefiting the Mexican peso.

Despite a reversal from two-year highs last week, bulls have continued to push in USD/MXN although the pair is notably lagging EUR/USD and USD/JPY for pricing in USD-strength over the past week.

The sustainability of the US disinflationary trajectory towards the Fed’s 2% inflation target will be tested today with the release of the June CPI indicator

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After reaching a peak of 8.70% in both August and September, Mexico’s CPI deceleration stalled in December at a reading of 7.82% YoY vs a November print of 7.8% YoY.

Mexico’s Core CPI print was lower than the previous month for the first time since early 2021.

Will the stronger Core CPI cause the Bank of Mexico to hike rates by another 75bps when it meets next Thursday?

The Bank of Mexico stuck to the script and hiked rates by the same amount as the US Federal Reserve, 75bps, to bring its overnight rate to 10%.

Banxico has been hiking rates at the same pace as the Fed since the beginning of summer, most recently with a 75bps rate hike last week.

Banxico has been hiking rates at the same pace as the Fed since the beginning of summer, most recently with a 75bps rate hike last week.

Mexico’s CPI continues to climb. As such, so does the value of the Peso.

The headline mid-month inflation rate for July is 8.16% YoY , led primarily by rising food costs. This is the highest level of inflation in 21 years!

It is worth watching EM currencies closely here as there is a risk we could see further, sharp, selling, which, in turn, could provide a fresh source of threat to the global financial markets.