Mexican Peso Braces for Fed Decision as Stock Market Advances

The Mexican peso traded at 18.29 per dollar this morning, strengthening from Monday’s 18.42 level as traders positioned for the Federal Reserve’s expected 25-basis-point rate cut today.

The currency gained 2.58% over the past month and 4.87% year-to-date, benefiting from Mexico’s higher real interest rates and sustained carry-trade demand.

Mexico’s IPC stock index climbed to 62,102 points yesterday, marking a 0.49% gain and approaching its September high of 62,252 points.

The rally was led by financial and consumer stocks, with Walmart de Mexico surging 2.89% and Banorte advancing 1.90%. Materials companies lagged, with the sector losing ground on copper-price weakness.

The dollar index fell to 96.64, its lowest level since July, as markets priced in near-100% odds of a Fed rate cut. Weak U.S. employment data showing only 22,000 jobs added in August fueled expectations for aggressive monetary easing.

The Global Liquidity Index, represented by the yellow line in trading charts, broke above its 20-period moving average, signaling renewed risk appetite in emerging markets.

Technical analysis reveals the peso’s strength against a weakening dollar backdrop. The USD/MXN pair broke below key support at 18.35 and closed under its 50-period moving average on the four-hour chart.

The 14-period RSI dropped to oversold levels around 23, suggesting potential for a technical rebound toward 18.20. However, the daily MACD shows growing negative momentum, pointing to further declines toward 18.15 if the pair fails to reclaim 18.30.

The IPC’s daily chart shows bullish momentum with support from its 200-day moving average and a positive MACD crossover. The index’s RSI reached 76, indicating overbought conditions, but the underlying trend remains intact.

The materials sector led declines with a 1.1% drop, while banks and consumer stocks gained 1.2% and 0.9% respectively.

Market participants are watching for Fed Chair Jerome Powell’s press conference and the dot-plot projections for guidance on the pace of future rate cuts.

The peso’s performance relative to regional peers shows Mexico outpacing Brazil’s real and other Latin American currencies, supported by Banco de México’s 7.75% policy rate and 3.57% inflation rate.

The underlying story reflects diverging monetary policies between the Fed’s dovish pivot and Mexico’s cautious approach to easing, creating favorable conditions for peso-denominated assets despite global uncertainty.

Top 5 Winners

• Walmart de México: +2.89%
• Banorte: +1.90%
• América Móvil: +1.60%
• Grupo Bimbo: +1.25%
• Grupo Financiero Santander México: +1.10%

Top 5 Losers

• Grupo México: –1.10%
• Industrias Peñoles: –0.95%
• Cemex: –0.80%
• Alsea: –0.75%
• Fomento Económico Mexicano (FEMSA): –0.60%