Mexican Peso Hits 25-Month High as US Inflation Data Looms

The Mexican Peso (MXN) has reached its highest value against the US Dollar in 25 months, closing Tuesday's session up 0.32%. The USD/MXN exchange rate is currently at 17.08, a level last seen in June 2024.

This upward trend is attributed to stronger-than-expected Mexican output and hopes of a Federal Reserve (Fed) pause, with traders waiting for the release of July's US inflation data on Wednesday.

Mexico's Industrial Output for June improved from a 0.8% contraction to 0.2%, exceeding forecasts of a 1.1% increase in the twelve months to June. This improvement provided a leg down in the USD/MXN pair, but traders refrained from driving the exchange rate past the 17.00 milestone.

If the US inflation data comes softer than expected, it would be positive for the Mexican Peso, as the Fed would not need to increase rates, and the interest rate differential would still favor the emerging-market currency.