Mexico’s private spending increased year-on-year from a previous decline of 0.4% to a rise of 1.4% in the third quarter. This growth indicates a positive shift in consumer behaviour within the Mexican economy.
Several events affecting global currencies are discussed. The Euro lost post-European Central Bank gains, while the Canadian dollar weakened as the US dollar’s strength limited its rise.
Commodity Market Performance
The commodity market saw gold consolidating below $4,350. Bitcoin, Ethereum, and XRP experienced rebounds amid challenging market conditions.
Discussions on central bank actions and economic indicators continued. The Federal Reserve’s response to soft inflation figures is in focus, while Japan’s finance minister mentioned possible interventions against excessive currency movements.
A guide highlighted the best brokers for 2025, focusing on aspects such as spreads, currency trading, and the features of different platforms. Recommendations for top brokers to trade Gold, Forex, and CFDs were also featured, covering various regions including MENA and Latin America.
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Mexican Peso Strategies
We’re seeing a significant turnaround in Mexico’s private spending, which jumped to 1.4% year-over-year in the third quarter after a previous contraction. This data, which covers the period through September, confirms that domestic demand is more resilient than we anticipated. Consequently, our immediate bias should tilt towards strength in the Mexican peso (MXN) against currencies with softening economies.
This spending boost is happening alongside persistent inflation, which we saw tick up to 4.2% in the latest report for November. This makes it highly unlikely that the Bank of Mexico will consider cutting its 11.25% policy rate anytime soon, a stance they reinforced in their meeting last week. This widening interest rate differential, especially against the Euro, makes the peso very attractive for carry trades.
For those positioning for further peso appreciation, buying peso futures is a direct approach, but we must watch for continued US dollar strength. A more risk-defined strategy is to purchase put options on the USD/MXN pair with expiries in late January or February 2026. This allows us to profit from a stronger peso while capping potential losses if the US Federal Reserve maintains its aggressive tone.
We are also seeing implied volatility on USD/MXN options remain relatively low, hovering near the 1-year low of 10.8% we saw just last month. This suggests the market may be underpricing the potential for sharp moves, given the conflicting forces of robust Mexican data and a firm US dollar. Buying straddles could be an effective way to position for a breakout as year-end flows subside and institutional players return.
