Mexico’s stronger-than-expected third-quarter growth lifted the peso, sending USD/MXN down to 18.5752 as traders weigh US mid-term election results.
MoneyTurkey Currencies Desk | 2 November 2026
Key points
- Mexico’s Q3 GDP rose 0.9% quarter-on-quarter, above the 0.7% estimate, and 3.2% year-on-year versus 2.5% expected.
- USD/MXN traded at 18.5752, above the 50-, 100- and 200-day moving-average cluster near 17.7802, keeping the near-term bias bullish.
The Mexican peso strengthened on Monday after INEGI reported that Mexico’s economy grew faster than forecast in the third quarter. USD/MXN fell to 18.5752, extending its move above the triple moving-average cluster near 17.7802. Traders now turn to Tuesday’s US mid-term elections, where betting markets give Democrats a 75% chance of taking the Senate and 96% of holding the House.
What happened
INEGI said GDP expanded 0.9% quarter-on-quarter in Q3, beating the 0.7% consensus and following a 1.4% rise in Q2. Year-on-year growth reached 3.2%, above the 2.5% forecast. Mexico’s finance minister said the economy could hit the upper end of the government’s range if momentum holds.
In the United States, the ISM manufacturing PMI rose to 55.5 in October from 54.5, above the 54.6 expected. Despite the stronger reading, money markets cut the odds of a 25-basis-point Fed rate cut next week to 77% from 80% a week earlier, according to the CME FedWatch Tool.
What is driving the currency
The peso’s gains reflect the GDP surprise and the fact that Mexico’s central bank, Banxico, targets inflation near 3%. Higher growth can support tighter policy, widening the interest-rate differential versus the dollar. Oil prices also matter: Mexico is a major exporter, and lower crude prices after reports of US-Iran talks weighed on the dollar.
USD/MXN remains above the descending resistance line drawn from 21.0808, confirming the broader recovery phase. The 14-day RSI cooled to 58.6 from overbought levels, suggesting momentum is still positive but less stretched. Initial support sits at the moving-average cluster near 17.78, with the next floor at 16.89.
Why it matters
The peso is the most-traded currency among Latin American peers. Its value is shaped by Mexico’s growth, Banxico policy, foreign direct investment, remittances and nearshoring flows. A sustained GDP beat can attract carry trades and portfolio inflows, tightening liquidity conditions and supporting the currency.
Traders also watch US politics. A Democratic sweep of both chambers could alter fiscal and trade policy, affecting risk sentiment toward the peso. Any sign of intervention by Banxico or a shift in Fed guidance will be watched for further moves in USD/MXN.
What to watch
- US mid-term election results Tuesday
- Next Banxico policy statement
- Oil-price reaction to US-Iran talks
- US data: CPI and retail sales
Related on MoneyTurkey
- BoE Rate Hike Fully Priced as Energy Costs Push Inflation
- China Weakens Yuan Fixing to Curb Currency Surge
For information only. Not investment advice.
