Mexican Peso slips as US-China deal boosts USD, Banxico rate cut bets weigh
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Mexico’s Industrial Production was mixed; USMCA revision talks set to begin in H2 2025. US-China reach tariff rollback deal, lifting the Greenback and risk sentiment across markets. Banxico is expected to cut rates for the seventh time on Thursday, adding downside bias to MXN. The Mexican Peso (MXN) is on the defensive against the US Dollar (USD) after developments over the weekend boosted the Greenback. A de-escalation of the US-China trade war, alongside expectations of a “large-sized” interest rate cut by the Banco de Mexico (Banxico), drove the USD/MXN pair higher. At the time of writing, it trades at 19.58, up by 0.79%. Earlier on Monday, Washington and Beijing announced they’d reached an agreement to lower tariffs from 145% to 30% on China’s imports to the US, while the US reduced duties from 125% to 10% on its imports from China. In the meantime, Mexico’s industrial production figures for March improved on an annual basis but declined on a monthly basis, according to the Instituto Nacional de Estadística, Geografía e Informática (INEGI). Traders are awaiting Banxico’s monetary policy decision on May 15, in which the Mexican institution is expected to reduce rates for the seventh consecutive meeting. Recently, Mexico’s Finance Minister Edgar Amador Zamora said that he’s confident in meeting the fiscal goals despite trade risks. Meanwhile, Mexico’s Economy Minister, Marcelo Ebrard, announced that the USMCA revision will commence in the second half of 2025. Daily digest market movers: Mexican Peso treads water as US-China deal boosts USD Mexico’s March Industrial Output dipped by 0.9% MoM, above estimates of -1.1%. On an annual basis, it rebounded from a 1.3% contraction and expanded by 1.9% YoY, exceeding forecasts of 1.5%. A Reuters poll revealed that most economists are expecting a 50-basis-point (bps) interest rate cut by Banxico. This would be the…
Filed under: News - @ May 12, 2025 11:23 pm