The Mexican Peso weakened to a one-week low of 20.2650 per US Dollar on Thursday, as fresh US auto tariffs added to global trade tensions ahead of the outcome of the Mexican central bank’s policy meeting.
Yesterday US President Trump announced a 25% tariff on imported cars and light trucks, which will take effect on April 2nd, along with reciprocal tariffs on countries that imposed levies on US imports.
The US government’s decision to implement the automotive tariffs followed earlier measures, including levies on steel and aluminum imports.
According to Swissquote Bank analyst Ipek Ozkardeskaya, the countries’ response to US tariffs will likely determine the US Dollar’s future course.
In case there is a retaliation from US largest trading partners, this may further hamper US growth and weigh on the greenback.
Banco de México is largely expected to cut its key policy rate by 50 basis points to 9% at its March 27th meeting.
In February, the Mexican central bank delivered a 50 bps cut, as inflation eased and the economy contracted slightly in the final quarter of 2024.
While progress towards the 3% inflation target has been substantial, Banxico officials have highlighted the importance of a flexible policy framework, which allows for swift adjustments in a “new stage” of monetary policy without placing financial stability at risk.
In terms of macro data, traders will be expecting the final estimate on US GDP growth for Q4, due out today, and US PCE inflation report, due out on Friday. Those data prints may provide more insight into the Federal Reserve’s potential course of action in regard to borrowing costs.
The USD/MXN currency pair was last up 0.27% on the day to trade at 20.1533.
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