Mexican Peso trims losses on Trump’s friendly remarks

Mexican Peso strengthened after Trump – Sheinbaum’s call, reversing some of the losses spurred by Trump's earlier threats.

Banxico minutes reflect a possibility of further interest rate adjustments based on the inflation outlook.

Fed’s favorite inflation gauge suggests prices remain high, justifying its gradual approach.

The Mexican Peso rallied against the US Dollar on Thursday after being pressured by Trump’s tariff threats. Upbeat news related to a call between the United States (US) President-elect and Mexico’s President Claudia Sheinbaum weighed on the exotic pair as the Peso recovered and trimmed weekly losses. The USD/MXN trades at 20.41,down 0.72%.

The call betweenSheinbaum and Trump revealed that both countries found common ground to fix issues involving them. In his Truth Social network, Trump indicated that he “had a wonderful conversation with the new President of Mexico, Claudia Sheinbaum Pardo. She has agreed to stop migration through Mexico.” He added they discussed how they could work “to stop the massive drug inflow to the US.”

Following the post, the USD/MXN began to slide after hitting a new year-to-date (YTD) high of 20.82 on Monday.

On the monetary policy front, the Bank of Mexico (Banxico) revealed in its minutes that the inflationary scenario will allow for further adjustments to interest rates.

Across the north of the border, the Federal Reserve’s (Fed) preferred gauge for inflation, the Core Personal Consumption Expenditures (PCE) Price Index, increased 2.8% YoY in October, up from 2.7% in September and in line with analysts’ estimates.. This justifies the Fed’s policymakers' gradual approach to monetary policy, adopted since the latest meeting in early November.