2025.10.1616:56:43UTC+00Mexican Peso Rebounds from 1-Month High

The Mexican peso appreciated beyond 18.40 per US dollar, rebounding from a one-month low of approximately 18.56 observed on October 10th. This movement follows increased anticipation of softer monetary policy from the Federal Reserve, as highlighted by Fed Chair Powell’s remarks this week, which indicated noticeable signs of labor market softening. These developments have diminished the dollar's support and reduced the interest rate gap between the US and Mexico. Concurrently, the US government shutdown has entered its third consecutive week, postponing the release of crucial US economic data that might have otherwise influenced interest rates and market strategies. On the domestic front, while Mexico's annual inflation climbed to 3.76% in September, it remains comfortably within the central bank, Banxico's, target range of 2–4%. This scenario bolsters Banxico's resolve to continue its policy easing following the rate cut in September, with the interest rate gap expected to continue driving demand for carry trade. Additionally, the upcoming USMCA review next year and Mexico's tariff advantages relative to other trading partners offer further support to the peso.