Mexican Peso takes a break after rallying on easing trade-war concerns

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The Mexican Peso has paused after rallying on easing fears about tariffs from the US and a trade war. The Mexican Trade Surplus grew in October and the economy is growing at a higher pace than expected. Technically, USD/MXN unfolds a down leg within its range.

The Mexican Peso (MXN) fluctuates between tepid gains and losses in its most-traded pairs on Friday as it stabilizes after the previous day’s rally. This came on the back of easing tariff fears after President-elect Donald Trump described his phone call with Mexican President Claudia Sheinbaum as “wonderful”, adding, “She has agreed to stop migration through Mexico.”

Mexican Peso recovers as trade-war tensions ease

The Mexican Peso rebounded on Thursday as fears subsided that Donald Trump would go ahead with his threat to place 25% tariffs on goods entering America from Mexico.

President Claudia Sheinbaum’s counter-threat to raise tariffs on US imports if Trump went ahead, as well as widespread unease in the investment community about the negative consequences of such a trade war on the US economy, could indicate Trump could take a more cautious approach. Many commentators have dismissed his threats as negotiation tools to get a better trade deal out of his close neighbors rather than literal pledges.

Official data on Thursday showed that Mexico recorded its first Trade Surplus in five months in October, of $370 million. This compared positively to the $370 million deficit recorded a year ago and was well up on the $579 million Trade Deficit in September. Of non-Oil exports, those directed to the US grew by 13.9%, while exports to the rest of the world rose by 11.6%, according to data from INEGI.

Banxico releases the Minutes from November meeting

The Bank of Mexico (Banxico) released the Minutes from its November meeting on Thursday. These showed that the board voted unanimously to cut interest rates to 10.25% in November compared to September when there was one dissenter, Banxico member Jonathan Heath.

The Banxico’s minutes were similar to those of September. However, they revealed a slightly more upbeat assessment of the Mexican economy.

The November meeting Minutes reported that, “Most members pointed out that during the third quarter of 2024, according to timely information, domestic productive activity is estimated to have grown at a higher rate than in the … Read More