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MEXICO: MXN Surges Back as Trump Accords Provide More Optimistic Backdrop

MEXICO
EM BulletMexicoBulletEmerging Market NewsNorth America
  • The Mexican peso has come surging back on Monday as President Sheinbaum appears to have made good on her promises that Mexico had a plan in the event of tariff implementation. While only pushed back by a month, the multiple accords have provided a much more optimistic backdrop and should foster hopes of a broader trade agreement.
  • Indeed, Trump indicated his involvement in the discussions with Sheinbaum’s administration, expressing optimism for a general trade accord and stressing Mexico's commitment to border security.
  • Providing an additional peso tailwind were comments from the finance minister, who reassured markets that both the finance ministry and Banxico are in a strong position to deal with the rising macroeconomic risks.
  • For USDMXN, short-term positioning likely leaves the downside vulnerable at this juncture, and the 50-day EMA is the closest point of reference for some added momentum south. This average intersects today at 20.4111, closely matching session lows. Below here, key support has been defined at 20.1343, the Jan 24 low.
  • Most recent dynamics do bolster the likelihood that the Banxico committee opt for bolder easing, and cut the key rate by 50bp on Thursday, however this is unlikely to be a primary driver for the peso. 
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  • The Mexican peso has come surging back on Monday as President Sheinbaum appears to have made good on her promises that Mexico had a plan in the event of tariff implementation. While only pushed back by a month, the multiple accords have provided a much more optimistic backdrop and should foster hopes of a broader trade agreement.
  • Indeed, Trump indicated his involvement in the discussions with Sheinbaum’s administration, expressing optimism for a general trade accord and stressing Mexico's commitment to border security.
  • Providing an additional peso tailwind were comments from the finance minister, who reassured markets that both the finance ministry and Banxico are in a strong position to deal with the rising macroeconomic risks.
  • For USDMXN, short-term positioning likely leaves the downside vulnerable at this juncture, and the 50-day EMA is the closest point of reference for some added momentum south. This average intersects today at 20.4111, closely matching session lows. Below here, key support has been defined at 20.1343, the Jan 24 low.
  • Most recent dynamics do bolster the likelihood that the Banxico committee opt for bolder easing, and cut the key rate by 50bp on Thursday, however this is unlikely to be a primary driver for the peso.