CurrencyMexico2026-02-05T19:56:00.663The Mexican peso retreated past 17.40 per US dollar giving back part of its recent gains, as markets digested Banco de México’s decision to hold the policy rate at 7.00% and signal greater caution on future easing. Earlier support from carry demand weakened as Banxico acknowledged firmer inflation risks, revised its inflation path higher through 2026, and emphasised graduality, reinforcing expectations that real yield support will narrow only slowly rather than remain firmly anchored. While the central bank’s pause limited downside by discouraging near term rate cut bets, the peso remained vulnerable to external pressure as a firmer US dollar and elevated US yields continued to raise the opportunity cost of peso exposure. Domestically, evidence that growth remains modest despite a Q4 rebound and lingering trade related uncertainty capped upside, encouraging profit taking after January’s strong appreciation.5235551USDMXN/mexico/currencyInterest RateMexico2026-02-05T19:19:23.943The Bank of Mexico left its benchmark interest rate unchanged at 7.00% in its February 5, 2026 meeting, pausing the easing cycle and keeping the rate at its lowest level since May 2022. This pause ends the recent sequence of rate reductions that began in March last year. Mexico’s economic activity expanded in Q4 2025 after the contraction recorded in Q3, although the Board warned that downside risks from trade tensions and global uncertainty persist. The decision to hold was taken unanimously by the Board, which judged a pause appropriate given the current inflation outlook and the need to assess the impact of policy changes. Headline inflation eased slightly to 3.77% in mid-January from 3.80% in November, while core inflation rose to 4.47% (from 4.43%), remaining stubbornly above 4%. Despite these near-term pressures, Banxico now projects inflation will converge to its 3% target in the second quarter of 2027.5235542MXONBR/mexico/interest-ratePrivate Investment YoYMexico2026-02-05T13:01:18.397Mexico’s gross fixed investment fell 6.4% year on year in November 2025, following a 5.5% drop in October and missing forecasts of a 5.6% decline, marking the 15th straight month of contraction. Spending on machinery and equipment plunged 14.5%, led by a 19.5% fall in both domestic and imported transport equipment. Investment in national machinery and equipment declined 12.6%, while foreign purchases dropped 11.9%. Meanwhile, construction rose 1.3%, rebounding from a 0.6% contraction in October, as a 10.3% surge in residential activity offset a 6.5% fall in non-residential building. On a seasonally adjusted basis, investment edged up 0.4% month on month, slowing from October’s 0.9% gain.5234321MEXPIYOY/mexico/private-investment-yoyManufacturing PMIMexico2026-02-03T15:15:42.8The S&P Global Mexico Manufacturing PMI edged up to 46.3 in January 2026 from 46.1 in December, still signaling a marked deterioration in operating conditions. The survey showed a third consecutive monthly decline in demand for Mexican goods. New orders fell at a sharp pace, the fastest since mid-2025, while output contracted significantly, only slightly less severe than at the end of last year. New export orders also declined, reflecting weak demand from the US, though the pace of contraction eased compared to December. Tariffs were cited as a key driver of higher input costs, with inflation accelerating further and remaining well above its long-run average. Firms continued to pass costs on to clients, although output price inflation slowed to its weakest rate in ten months. Job shedding moderated to a three-month low but remained solid. Meanwhile, business confidence weakened, with firms turning pessimistic about the year-ahead outlook for only the second time in over five years.5226841MEXICOMANPMI/mexico/manufacturing-pmiBusiness ConfidenceMexico2026-02-03T12:16:12.977The manufacturing business confidence in Mexico eased to 48.4 in January of 2026 from the downwardly revised 48.6 in the previous month, the lowest since April of the previous year, to mark 11 consecutive months below the 50-point neutral threshold. Surveyees noted a deterioration in the outlook of Mexico's economy (-0.4 to 52.1) and the outlook of their companies (-0.4 to 56). Likewise, sharper contractions were noted on whether it is the right moment to invest (-0.1 to 35.3) and the current condition of Mexico's economy (-0.2 vs 48).5226221MexicoBC/mexico/business-confidence