Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone
May 29, 2025
“The Mexican Peso traded steadily on Wednesday ahead of the release of Banxico’s latest policy meeting minutes. Despite external risks easing and inflation remaining near target, domestic indicators continue to paint a fragile macroeconomic picture.
Mexico’s unemployment rate held at 2.5%, but the stability masks broader labor market weakness as over 119,000 jobs were lost in Q1 2025, the worst start to a year since 2009, excluding the pandemic period. The decline in both employment and labor force participation, particularly in formal and employer-based jobs, highlights a loss of momentum in the post-pandemic recovery and undermines consumer demand. This backdrop may constrain the Peso’s potential upside in the near term.
Looking ahead, the focus now shifts to Banxico’s meeting minutes due Thursday. After delivering an eighth consecutive rate cut in May, market participants will closely monitor for clues on whether the Board will signal a pause or continue easing. Any sign of caution, especially tied to US trade policy or persistent inflation pressures, could lend temporary support to the Peso. In contrast, further rate cuts, as expected in June, would likely renew depreciation pressure.”