FX.co ★ Mexican Peso at 1-Month Low

The Mexican peso has depreciated, crossing the 18.8 mark against the US dollar and hitting its lowest point in a month. This decline comes as the US dollar strengthens, bolstered by a series of significant trade deals, including the implementation of 15% tariffs as per the new US–EU and US–Japan agreements. These developments have fueled expectations of a robust US economic expansion and a consistent approach from the Federal Reserve. On the domestic front, Mexico faces challenges including a significantly reduced merchandise trade surplus in June and sluggish industrial production, raising alarms about the vitality of its export sector amid impending US tariff deadlines that add to the uncertainty. Nevertheless, the peso's depreciation is mitigated by Mexico's notably tight labor market, with unemployment recorded at 2.7% in June, the lowest since 2002. Additionally, elevated interest rates from Banxico, maintained amidst persistent core inflation, help sustain attractive real yields, drawing in carry-trade investments.