Market Analysis by Quasar Elizundia, Expert Research Strategist at Pepperstone
– March 08, 2025 –
“The Mexican peso remains stable at the end of the week, trading within a relatively narrow range, reflecting market caution amid key economic data from the United States and Mexico, as well as important trade developments.
The recent release of U.S. labor figures, showing 151,000 jobs created in February, below the expected 160,000, and an unemployment rate rising to 4.1%, leaves room for the Federal Reserve to adopt a slightly more dovish tone in its next statement, potentially supporting the Mexican peso.
Another key factor was former President Donald Trump’s decision to extend tariff exemptions for Mexico and Canada by another month. This announcement provides significant relief for the peso, as trade stability between Mexico and its main trading partner, the United States, remains crucial for Mexico’s economic performance.
Meanwhile, Mexico’s inflation data showed mixed results in February, with an annual rate of 3.77%, slightly above the 3.59% recorded in January, yet still within the Banco de México (Banxico) target range. Core inflation rose by 0.48% on a monthly basis, mainly driven by food and services. However, non-core inflation fell by 0.39% monthly, although its annualized rate increased to 4.08%, reflecting persistent challenges for Banxico in terms of monetary policy.
In this context, Banxico’s monetary policy will be key in determining the trajectory of the Mexican peso in the medium term. If the central bank continues with its new aggressive rate-cutting stance, the peso could face downward pressure.
Looking ahead to next week, markets will closely watch Mexico’s consumer confidence and industrial production data. Positive results in these indicators could provide additional support for the Mexican peso, while disappointing figures could limit its potential gains.”
Analysis by Quasar Elizundia, Expert Research Strategist – Pepperstone
