Mexican Peso Weakens, but is Marks Weekly Gains

The Mexican peso depreciated against the U.S. dollar on Friday, reversing earlier stability and edging toward the psychological threshold of 20 units per dollar, resulting in a negative weekly balance for the currency.

The exchange rate closed at 19.9684 pesos per dollar, compared to the previous day’s official close of 19.8510, according to data from the Bank of Mexico (Banxico). This represented a loss of 11.74 cents or 0.59%. Throughout the session, the exchange rate fluctuated between a high of 20.0200 and a low of 19.7722.

Meanwhile, the U.S. Dollar Index (DXY), which measures the greenback against six major currencies, advanced 0.24% to 104.31 points. Analysts attributed the peso’s decline to stronger-than-expected U.S. economic data, including higher capital goods orders and improved consumer confidence, which suggest that the Federal Reserve may slow the pace of rate cuts.

The yield on the 10-year U.S. Treasury note reached 4.24% after briefly dipping earlier in the day. According to CME’s FedWatch tool, futures markets currently price in a 97% chance of a 25-basis-point rate cut in the next Fed meeting.

In September, the Federal Reserve lowered its key interest rate by 50 basis points to a range of 4.75%-5%. Markets are now closely watching for signs of whether the Fed will maintain this pace, reduce it, or pause cuts altogether.

In Mexico, inflation data for the first half of October showed an uptick in consumer prices, reinforcing expectations that Banxico will continue cutting rates.

For the week, the peso posted a loss, closing at 19.9684 units per dollar, down from 19.8860 the previous Friday. This 0.42% decline (8.24 cents) marked the peso’s worst performance in six weeks.