Mexican peso volatile as markets digest tariff signals and mixed data

The Mexican peso recorded some volatility against the U.S. dollar on Tuesday, as market participants assessed fresh trade policy developments and economic releases.

While President Donald Trump hinted at more limited tariffs scheduled for April 2, market sentiment was tempered by his proposal of tariffs on countries purchasing Venezuelan oil.

Additional trade restrictions could deepen concerns over economic stability and weigh on the currency.

Adding to the cautious mood, disappointing US consumer confidence data could pressure the dollar.

Any US economic slump would likely affect Mexico’s economy as well, putting further strain on the peso. However, domestic data offered some relief. January retail sales outperformed expectations, rising 0.6% month-on-month and 2.7% year-on-year, suggesting healthy consumption levels. Job creation in the sector could further support the optimism, which could boost the peso.

However, structural challenges could temper the peso’s outlook as the sharp drop in wholesale trade could signal economic fragilities. At the same time, strong growth in average earnings could fuel inflationary pressures. However, Banxico could maintain its rate-cutting policy, potentially limiting the peso’s gains.