Quick overview
The Mexican peso strengthened against the U.S. dollar for a fifth consecutive session on Friday, supported by growing bets on Federal Reserve rate cuts and optimism surrounding trade negotiations between China and the United States.
The exchange rate closed the day at 18.8529 pesos per dollar. Compared to Thursday’s official close of 18.8623, the peso appreciated marginally by 0.05%, or less than one cent, according to data from Mexico’s central bank (Banxico).
The dollar traded within a range of 18.9265 (high) and 18.8113 (low) pesos. Meanwhile, the U.S. Dollar Index (DXY)—which tracks the greenback against a basket of six major currencies—rose 0.06% to 97.35 points.
USD/MXN
Trade and Monetary Policy Support the Peso
U.S. Commerce Secretary Howard Lutnick said Friday that a trade framework between Washington and Beijing had been finalized. He also noted that the Trump administration is pursuing imminent agreements with 10 major trade partners.
On the monetary front, the personal consumption expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose 0.1% month-over-month in May and 2.3% year-over-year, matching expectations.
The inflation figures, combined with recent comments from Fed officials, support market expectations of 75 basis points in rate cuts this year. Those bets were further reinforced Thursday by a sharper-than-expected U.S. GDP contraction.
Risk Sentiment and Outlook
Reduced risk aversion also supported the peso this week, after President Trump announced a ceasefire between Israel and Iran. Compared to last Friday’s close of 19.1683, the peso gained 31.54 centavos—or 1.65%—over the week.
The currency continues to strengthen, with a nearly 1.9% gain over the past 30 days. With no major developments in the Middle East conflict, market attention is now focused on trade negotiations, which face a July 9 deadline.
“Given current conditions, it wouldn’t be unreasonable to see the return of a ‘super peso’—but ultimately, the market will decide,” a local trader remarked.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
