By Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS.com
September 16, 2025 – “The Mexican peso starts the week with a gain of more than 0.50%, trading near 18.34 pesos per dollar, and extends its rally to seven consecutive sessions. This performance is mainly driven by the weakness of the U.S. dollar, which is linked to growing expectations of a Federal Reserve rate cut scheduled for September 17. In this context, statements by political figures such as Donald Trump, calling for more aggressive cuts of up to 50 basis points, have intensified market speculation.
Beyond the political noise, recent macroeconomic data reinforce this expectation. The U.S. labor market has shown signs of weakening, with job gains coming in below forecasts and the unemployment rate beginning to tick higher. At the same time, inflation, though still above the official target, has eased in some components, such as producer prices (PPI), making a rate cut more plausible. Markets are already pricing in at least a 25-basis-point cut at the upcoming policy meeting.
This week, attention will be focused on key U.S. indicators: industrial production, retail sales, housing sector data, and jobless claims. No major surprises are expected, but given the proximity of the rate cut, any deviation could trigger volatility. Additionally, Friday will see “triple witching,” the simultaneous expiration of three types of financial instruments, which typically fuels sharp market moves.
Mexico will also release important data this week, including reports on consumption, manufacturing, and Gross Domestic Product (GDP). These figures will be key in determining whether domestic confidence and real economic activity are aligned with the peso’s recent rally. However, Mexican markets will be closed on Tuesday in observance of Independence Day, which could impact liquidity and amplify moves once markets reopen.
Another factor that could influence the exchange rate and the country’s public finances is the issuance of Eurobonds with maturities of 4, 8, and 12 years. The goal is to support Pemex in paying and refinancing its debt as part of a broader operation to ease the company’s financial burden. This issuance could entail significant debt obligations for the government, potentially creating medium-term pressure, particularly if oil or tax revenues fail to improve.
Pemex, long under financial strain, has seen a slight improvement in its credit outlook following specific government support measures. This bond issuance would bolster its liquidity but would also increase the Mexican government’s exposure to future commitments. A combination of high debt levels, stagnant oil production growth, and high operating costs remains a concern for risk analysts.
As for the currency market, the general expectation is that the exchange rate will fluctuate between 18.34 and 18.55 pesos per dollar during the session, with potential for sharp moves in reaction to unexpected news, both local and international. The key will be watching how the peso and financial markets react to official U.S. monetary policy announcements and economic data from both the U.S. and Mexico.
In conclusion, the Mexican peso is currently benefiting from U.S. dollar weakness fueled by clear expectations of a Federal Reserve rate cut. While the U.S. economy is not free from risks, with inflation and labor market data remaining crucial, recent figures point toward a pause in monetary tightening. In Mexico, domestic signals will be critical: economic activity indicators and debt decisions, such as the Pemex Eurobond issuance, will determine how much room the country has to manage fiscal pressures. In this scenario, cautious optimism is warranted, but volatility cannot be ruled out, and investors should closely monitor both external developments and the government’s financial commitments related to Pemex.”