Mexican Peso Loses Ground

The Mexican peso weakened past 17.2 per US dollar, retreating from its mid-2024 peak as investors digested President Trump's move to impose a new 15% global tariff under Section 122 and the latest economic growth figures. This trade policy pivot re-established a major headwind for Mexico's export-heavy economy, cooling the relief rally sparked by the court's decision to invalidate previous emergency duties. The currency also faced pressure from a resilient US dollar, supported by hawkish signals from incoming Fed Chair Warsh and sticky core PCE inflation of 3%, narrowing the appeal of the pesos yield advantage. Despite a revised Q4 GDP print showing a strong 0.9% expansion in Mexico's industrial and service sectors, the prospect of renewed 150-day trade surcharges weighed on growth. Banxico remains under scrutiny as policymakers weigh inflationary risks of these fresh protectionist measures against a slowing global demand profile.

The Mexican peso strengthened past 17.15 per US dollar, to test its highest level since mid-2024 as investors cheered a US Supreme Court ruling that struck down President Trump's global tariffs. The court decision to invalidate broad emergency duties removed a major headwind for Mexico's export-heavy economy and fueled a sharp relief rally. This legal setback for the White House overshadowed a mixed US macro backdrop where soft Q4 GDP growth of 1.4% was contrasted by sticky core PCE inflation of 3% to keep the Fed's rate path uncertain. Despite ongoing geopolitical tensions in the Middle East the peso benefited from improved trade sentiment and narrowing risks of supply chain disruptions. Banxico remains in focus as traders assess whether domestic rate differentials will continue to support the currency while global trade uncertainty recedes following the landmark ruling. The currency is now on track for its best weekly performance in months.

The Mexican Peso touched 17.11 against the USD, the highest since June 2024. Over the past 4 weeks, US Dollar Mexican Peso lost 2.62%, and in the last 12 months, it decreased 15.51%.