Mexican Peso Slides As Fed Rate Cut Odds Hit 95% Amid Weak US Job Data

Mexican peso closed at 18.7306 per dollar on September 4, gaining 0.14% as US labor market weakness fueled Federal Reserve easing expectations.

The peso traded between 18.6860 and 18.7310 during the session, settling near the higher end after overnight volatility. US job openings fell to 7.181 million in July, below forecasts of 7.380 million and June’s 7.357 million reading.

Markets now price a 95.6% probability of a 25-basis-point Fed cut this month, up from previous estimates. The Dollar Index declined 0.16% to 98.16, pressuring the greenback against emerging market currencies.

Mexico’s stock market posted mixed results, with the S&P/BMV IPC falling 0.16% to 59,652 points after Tuesday’s 1.50% rally to record highs. The index retreated from its all-time peak of 60,103 reached earlier this week.

Trading volume remained elevated at 162.64 million shares. Technical analysis reveals the peso hovering near critical support at 18.50, with the 50-day moving average providing resistance around 18.70.

The RSI sits at neutral levels while the Global Liquidity Index shows continued downward pressure on dollar strength. Key resistance emerges at 19.00, marking the 200-week exponential moving average.

Winners included Industrias Peñoles, surging 9.11% to 718.20 pesos, hitting all-time highs on precious metals strength. Banco del Bajio gained 2.75% to 47.44 pesos, while Gentera advanced 2.07% to reach record levels at 46.86 pesos.

Losers dominated the session, with Fomento Económico falling 3.84% to 156.48 pesos, touching 52-week lows. Coca-Cola Femsa declined 3.52% to 151.79 pesos, and Genomma Lab dropped 2.78% to 22.39 pesos.

Market breadth showed 135 declining stocks versus 119 gainers. Bank of Mexico maintains its benchmark rate at 7.75% following a 25-basis-point cut in August, the smallest reduction after four consecutive 50-point decreases.

Deputy Governor Jonathan Heath remains the sole dissenter, advocating for policy caution amid persistent inflation concerns. Foreign exchange reserves reached 242 billion dollars in July, marking record highs and providing substantial buffers against external shocks.

The peso benefits from Mexico’s 7.75% interest rate versus the Fed’s 4.50% target, maintaining attractive carry trade differentials.

Trade tensions persist with USMCA review scheduled for 2026, while President Sheinbaum’s economic plan targets reduced Chinese imports and increased domestic manufacturing.

Mexico aims to become the world’s tenth-largest economy by 2030, up from current twelfth position. The peso faces key technical levels with 18.21 marking next major support if current levels fail.

Resistance at 19.00 requires sustained buying pressure to overcome, while volume patterns suggest consolidation around current ranges. Friday’s US employment report will determine near-term direction for both currencies and regional equity markets.