January 29, 2025 - Trading Hefzibá

The Mexican peso begins this Wednesday showing strength against the US dollar, while financial markets remain attentive to the Federal Reserve's (Fed) monetary policy decision scheduled for this afternoon. Despite the threats from Donald Trump's government regarding the imposition of tariffs on Mexican products starting February 1, the local currency remains strong.

Exchange Rate and Labor Data

At 07:30 hours (Mexico City time), the dollar was quoted at 20.47 pesos, representing a 0.29% appreciation of the peso. This advance adds to the 0.53% recorded in the previous session, when the exchange rate closed at 20.55 pesos per dollar.

The strengthening of the peso has been driven by positive labor market data in Mexico. The unemployment rate in December showed a decrease to 2.4%, below market consensus, which has reinforced expectations of a moderate monetary stance from Banxico.

Trump's Threats and Market Response

Despite the White House confirming that it will maintain plans to impose tariffs on Mexican products, the markets do not seem to react with the same intensity as in previous occasions. According to analysts, this could be due to investors not viewing the measure as definitive or thinking that the tariffs, if implemented, would be temporary and subject to negotiations.

“It is not very clear whether the market does not believe Trump this time or considers that the tariffs will not be applied. In any case, attention remains focused on the Fed's decisions and its possible reaction to the political pressures from the U.S. president,” explained Jorge Gordillo Arias, director of Economic Analysis at CIBanco.

Expectations about the Fed and the Dollar Index

The market expects the Fed to keep the interest rate unchanged in a range of 4.25%-4.50%, despite Trump's demands for an immediate reduction. Meanwhile, the dollar index, which measures the performance of this currency against six other major currencies, rose by 0.36% to 108.26 units.

The statement and press conference of Jerome Powell, chairman of the Fed, will be key to understanding the direction of monetary policy in a context of political and economic pressures.

Conclusion

The Mexican peso continues to challenge Trump's trade threats, remaining firm thanks to internal factors and the expectation of a cautious Fed. However, investors should stay alert to today's events, as they could shape the direction of the markets in the coming weeks.

Trading Hefzibá continues to monitor the markets to provide you with the most relevant information in real time.