Fed Cut Weakens Dollar As Mexico’s Peso And Stocks Pause

Key Points

• Fed’s rate cut knocks the dollar index below 99 as the peso holds near 18.18 per dollar.
• Mexico’s IPC slips 0.45% despite Wall Street’s rally, with media and consumer names outperforming heavyweights.
• Charts show a strong but tiring “super peso” trend and an equity market pausing after a 28% year-to-date climb.

The Federal Reserve’s long-telegraphed rate cut finally arrived – and the dollar blinked. After the 25-basis-point move to 3.5%–3.75%, the dollar index slid about 0.6% toward 98.6, its weakest level since October, as traders priced in easier money and a long period without new hikes.

Wall Street cheered with broad gains in the S&P 500 and Dow. Mexico’s markets reacted more cautiously. The peso actually extended its winning streak, closing Wednesday around 18.18 per dollar, a 0.05% appreciation on the day and close to its strongest level in more than a year.

Strategists at Banco Base describe a “disconnect” between a slowing Mexican economy and a currency still buoyed by one of the world’s richest real interest-rate cushions and by nearshoring flows that favour manufacturers over bureaucracy and heavy state intervention.

Short-term charts underline that tension. On the four-hour USD/MXN graph, the pair grinds sideways just above 18.15 with narrowing Bollinger Bands and a MACD line curling up from deeply negative territory – a pause rather than a clean reversal.

The daily and weekly trends remain clearly downward: the dollar trades below its major moving averages and under the Ichimoku cloud, with RSI in the low-40s signalling a strong but controlled “super peso” trend.

Equities told a different story. The S&P/BMV IPC fell 0.45% to 63,409 points, breaking a two-day winning run even as US indices surged on the Fed news.

Actinver’s Enrique Covarrubias notes that the index is still up roughly 28% in 2025 but slipped into a small loss for December. Turnover reached about 220 million shares, with more than 17.6 billion pesos changing hands.

Beneath the surface, stock pickers were busy. Among the biggest winners, Grupo Televisa jumped 6.78%, Grupo Nutrisa 5.77% and Grupo Kuo 4.63%.

On the losing side, blue-chip names Orbia, Vesta, GCC, Inbursa and Banco del Bajío fell between 1.9% and 3.3% as investors took profits in rate-sensitive cyclical plays.

The Mexico ETF EWW, now managing around $1.9 billion and up roughly 50% this year, slipped about 0.3%, reflecting a market that still likes Mexico’s disciplined macro mix – but is no longer willing to pay any price for the story.

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