- GDP contracts in Mexico in Mexico for the first time since 2021.
- Espected Pancico 2025 expects growth to 0.6 %, much lower than the Ministry of Finance’s expectations.
- Mixed American data: PMI manufacturing is improving, but PMI services fall into a shrinkage.
The Mexican Bzo (MXN) lost some land against the US dollar (US dollar) on Friday, such as the Mexican economy in the last quarter of 2024. This indicates that expectations are not promising as expected amid an environment of uncertainty related to the United States (United States) policies President Donald Trump. USD/MXN trading in 20.41, 0.54 % gains.
Mexico’s economy revealed in the fourth quarter of 2024 for the first time since the third quarter of 2021, the INGI Statistics Agency. Total local products (GDP) matches an annual quarterly basis compared to previous reading and expectations on an annual basis.
Banco De Mexico (banxico) expects growth this year to slow down by 0.6 %, and the latest meeting minutes revealed. The Board of Directors expects the economy to grow by 0.6 % in 2025, a decrease than 1.2 % by the expected, much less than the 2.3 % Mexico Finance Ministry expectations and under the investigation of CITI by 1 %.
Looking at the background, the USD/MXN pair appears on the upward direction. S&P Global revealed that manufacturing activity in the United States may improve. Meanwhile, the Service Manager Index decreased to the deflation area for the first time since January 2023.
Other data showed that current homes sales decreased and consumer morale reading has deteriorated at the University of Michigan (UOM) for February.
Daily Digest Market Movers: Mexican Peso Heavy, the economy is expected to be weak
- GDP (GDP) decreased by -0.6 % of QOQ in the fourth quarter of 2024, decreasing from the expansion of 1.1 % and identical estimates of Reuters poll.
- With annual terms, Mexico’s economy grew by 0.5 % in the fourth quarter compared to 2023 numbers. The growth of the entire year was 1.2 %, which is the worst annual number since 2020.
- The monetary policy between Pancico and Favors is more than USD/MXN. The Federal Reserve is expected to maintain steady rates, while Pancico is expected to reduce prices again by 50 basis points at the next meeting.
- At the time of writing this report, US President Donald Trump reiterated the 25 % definitions on cars, which are valid on April 2.
- Commercial conflicts between the United States and Mexico remain in the forefront and the center. Although countries have previously found a common ground, US dollar traders/MXN should know that there is a temporary stop for 30 days and that tensions may arise at the end of February.
Technical expectations USD/MXN: The Mexican Bezo falls where USD/MXN is 20.20
The USD/MXN pair does not represent sudden changes, with a slightly tilted trend to the upward trend. After the bottom near the simple moving average for 100 days (SMA) at 20.23, buyers pay the pair up. However, the resistance of the movement near 20.40, keeps the strange spouses side trading.
If the US dollar/MXN is wiped 20.40, the following resistance will be 20.50, followed by the January 17 sign 20.93. On more strength, the following main resistance levels are 21.00 and The Maine (YTD) above 21.28. On the contrary, if the husband decreases below 20.23, the number 20.00 has increased after that. The latter’s breach reveals on October 18, 2024, low at 19.64, before SMA for 200 days at 19.37.
Common questions between Mexican Peso
The Mexican Bezo (MXN) is the most circulating currency among its peers in Latin America. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even the levels of transfers sent by Mexicans who live abroad, especially in the United States. Geopolitical trends can also move MXN: for example, the proximity process – or the decision of some companies to transfer the manufacturing capacity and supply supply chains near its countries of origin – is an incentive for the Mexican currency as the country is the main manufacturing center in the American continent. Another MXN catalyst is oil prices because Mexico is a major source of commodity.
The main goal of the central bank in Mexico, also known as Pancico, is to maintain inflation at low and stable levels (in or near its 3 % target, the center point in the range of tolerance between 2 % and 4 %). To this end, the bank determines an appropriate level of interest rates. When inflation is very high, BancicPico will try to tame it by raising interest rates, making it more expensive for families and companies to borrow money, thus cooling demand and macroeconomic economy. The highest interest rates are generally positive for Mexican Peso (MXN) because it leads to higher returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken MXN.
The total economy data is a key to assessing the state of the economy and can have an impact on the Mexican PESO (MXN) evaluation. The strong Mexican economy, based on high economic growth, is a decrease in unemployment and high confidence, useful for MXN. It not only attracts more foreign investments, but may also encourage the Bank of Mexico to increase interest rates, especially if this force corresponds to high inflation. However, if economic data is weak, MXN is likely to decrease.
As a currency of the emerging market, the Mexican Biso (MXN) tends to strive during risk periods, or when investors see the wider market risk low and thus yearn to communicate with investments that bear greater risks. On the contrary, MXN tends to be weak in times of turmoil in the market or economic uncertainty where investors tend to sell high -risk assets and flee to the most resigned safe havens.
