The Mexican peso is falling for the second consecutive session due to the global strength of the dollar, driven by expectations that the Federal Reserve could implement fewer rate cuts than anticipated.
The Mexican peso suffered a notable depreciation against the US dollar on Tuesday morning, marking its second consecutive day of decline. This decline of the local currency is due to the global strengthening of the dollar, driven by expectations that there will be fewer interest rate cuts in the United States than initially expected.
The spot exchange rate stands at 19.6054 pesos per dollar. Compared to the 19.3953 units per dollar at the official closing of the Bank of Mexico (Banxico) the previous day, it represents a loss of 21.01 cents for the Mexican currency, equivalent to a drop of 1.08%.
The dollar fluctuates in a range between a high of 19.6437 units and a low of 19.3683 units. Meanwhile, the Dollar Index (DXY), which measures the performance of the dollar against six major currencies, fell 0.18%, standing at 103.12 points.
The US dollar remains close to its highest level in more than two months, driven by expectations that the Federal Reserve will reduce interest rates more moderately due to the strength of the economy.
«The Mexican peso continues its decline, joining the 70% of emerging currencies that fall against the dollar, while markets expect less aggressive rate cuts by the Fed and an environment of aversion to global geopolitical risk persists,» said analysts at Monex.
According to CME Group’s FedWatch tool, traders see it likely that the Fed will make another rate cut in November, although it is likely to be smaller. The odds are 93% for a 25 basis point cut.
In addition, this morning the markets reacted to a report on the US manufacturing sector, which came in below expectations. The New York Fed manufacturing index showed a result of -11.9 points, far from the 3.85 points expected. No further relevant economic reports are expected for today.