Mexican Peso Holds Firm as Central Bank Minutes Provide Support

The Mexican peso remained firm against the US dollar on Thursday, with USD/MXN trading near 16.96, showing little change on the day. The latest minutes from Mexico's central bank revealed a cautious stance on monetary policy among policymakers, a signal that provided short-term support for the peso; meanwhile, US employment data indicated a stable labor market, limiting one-sided movement in the exchange rate.

**Central Bank's Cautious Tone Eases Depreciation Pressure**

In the minutes, the Bank of Mexico emphasized a prudent assessment of the inflation outlook, suggesting no urgency to adjust the interest rate path in the near term. This stance contrasts with earlier market expectations that Mexico might follow the Federal Reserve's footsteps, helping to preserve the peso's interest rate advantage over the dollar. Market reports show that Mexico's current policy rate remains significantly above the Fed's rate range, a gap that continues to provide underlying support for the peso. However, the minutes also revealed concerns over slowing economic growth, implying that the peso's upside potential may be limited.

**US Employment Data Steadies Dollar Movement**

The latest US employment indicators showed resilience in the labor market, which to some extent reinforced expectations that the Fed will maintain its current interest rate levels, preventing a sharp decline in the US dollar index. For the Mexican peso, external pressure has not risen significantly, allowing the exchange rate to find short-term equilibrium near 16.96. Analysts noted that if subsequent US economic data remains strong, it could push the dollar higher and weigh on the peso; conversely, if domestic data such as Mexican retail sales outperform expectations, the peso could strengthen further.

**Short-Term Focus on Retail Sales and External Risks**

Market attention is shifting to upcoming Mexican retail sales data, which will provide the latest clues on domestic demand strength. Additionally, developments in Middle East geopolitical tensions and further interpretations of the Fed's meeting minutes could indirectly impact the peso through risk sentiment channels. Overall, amid the interplay of central bank policy divergence and external uncertainties, USD/MXN is likely to continue fluctuating around the 16.96 level in the short term.