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Mexican peso hits two-year high as USD weakens

USD/MXN traded around 16.92, helped by a 275-basis-point Mexican peso interest-rate advantage and a weaker week for the US Dollar Index.

Reported · Written up by our desk · Major Pairs

The Mexican peso strengthened to levels last seen in May 2024, with USD/MXN falling to a two-year low as the US dollar weakened, according to FXStreet. The pair traded near 16.92, down 0.22% for the week and 0.50% over the week, even as Mexican retail sales missed expectations.

FXStreet reported that momentum improved after a US Dollar Index (DXY) reading ended flat on the day at 98.84 but was down more than 0.80% for the week. The move also reflects a carry-trade tailwind tied to a 275-basis-point interest rate differential favoring the Mexican peso versus the greenback.

On the Mexican side, retail sales fell short of estimates, shrinking -0.2% month over month in June after -0.6% contraction in May, and rising 2.7% year over year versus forecasts of a 3.1% increase. FXStreet added that Bank of Mexico minutes showed officials remain cautious on rates, while noting inflation risks are tilted to the upside.

Looking ahead, FXStreet said Mexico’s economic calendar includes inflation data for the first half of August, second-quarter GDP, and the current account. In the US, traders are set to focus on Treasury Secretary Bessent’s announcement of Iranian sanctions, the US PCE report, benchmark revisions from the Bureau of Labor Statistics, and Fed Chair Warsh at Jackson Hole.

Latest closeDollar index 99.64 ▼0.3%

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