The Mexican peso strengthened against the United States dollar on Friday, marking a positive end to the week.
This recovery came after a local holiday.Investors are gearing up for a significant week ahead regarding monetary policy decisions from both the Federal Reserve and the Bank of Mexico.
At the close of trading, the exchange rate stood at 20.1281 pesos per dollar.This represented a gain of 7.71 cents, or 0.38%, compared to a reference price of 20.2052 pesos recorded by LSEG the previous day.
Notably, there was no official exchange rate published by the Bank of Mexico (Banxico) on this day.Throughout Friday, the dollar fluctuated between a high of 20.2647 pesos and a low of 20.1099 pesos.
The United States Dollar Index (DXY), which measures the dollar against a basket of six currencies, increased slightly by 0.04% to reach 107.00 points.Analysts from Monex attributed the pesos gains to a retreat in the dollars strength after it briefly surpassed 20.25 pesos overnight.
They noted that weak local industrial production figures reinforced expectations for potential interest rate cuts by Banxico.Mexican Peso Drops 4% in Two Weeks in United States Pre-Election Slide.
(Photo Internet reproduction)On Wednesday, the Federal Reserve will announce its monetary policy decision following a two-day meeting.
According to CME Groups FedWatch tool, there is a 97.1% probability that the Fed will implement a 25 basis point cut, making the subsequent announcement crucial for market reactions.Bank of Mexicos Rate Cut and Peso PerformanceThe Bank of Mexico is expected to follow suit with its own interest rate announcement on Thursday.
Analysts anticipate a similar cut due to decreasing inflation rates.Renato Campos from Squared Financial emphasized that declining inflation allows central banks to focus on growth risks.
Over the past week, the peso demonstrated stability with modest gains.Compared to last Fridays closing rate of 20.1793 pesos per dollar, this weeks performance reflects an accumulated gain of 5.12 cents or 0.25%.
Analysts from Golden Capital FX observed that the dollar has shown a downward trend against the peso in recent weeks.It appears to be forming support around the 20.10 peso mark.
They also highlighted the significance of upcoming economic events that could influence market dynamics further.