Mexican peso/yen trading has been driven by delays in the USMCA talks, with expectations building that negotiations will resume this week. We review recent currency trends and next week’s key focus.
Last week, Mexican peso/yen trading opened at around ¥9.228 before plunging into the ¥9.1 range and hitting its lowest level since 3 August. The move was led by yen strength and tracked fluctuations in dollar/yen as expectations of a Bank of Japan rate hike influenced trading. The peso remained firm against the dollar.
On the 10th, the peso/yen pair briefly recovered to the ¥9.1 range, helped by dollar/yen rebounding to the mid-¥154 range. On the 11th, it traded in a ¥9.075–¥9.102 range.
The key focus this week is the delay in negotiations to review the USMCA (United States-Mexico-Canada Agreement). Talks have continued beyond the July deadline, and the fourth round of negotiations, scheduled for the first week of September, has not taken place. Economy Minister Marcelo Ebrard is expected to resume talks in Washington in the coming days. Automotive rules of origin are the main point of contention.
The outlook for MXN/JPY next week is a ¥8.975–¥9.225 range, with conditions expected to remain volatile. The peso’s movement could be determined by whether the USMCA talks resume. August CPI rose 3.26% year on year, below market expectations, although some observers believe inflation accelerated for the first time in 5 months.