Mexico’s private spending rose from a decline of 0.4% to an increase of 1.4% in the third quarter, showing a positive trend in consumer behavior. Global currency events are shaping the market. The Euro lost gains from the European Central Bank, and the Canadian dollar weakened as the strong US dollar held it back.

Commodity Market Performance

In the commodity market, gold is holding steady below $4,350. Meanwhile, Bitcoin, Ethereum, and XRP are bouncing back despite tough market conditions. The focus remains on central bank actions and key economic indicators. The Federal Reserve is responding to low inflation figures, while Japan’s finance minister mentioned the possibility of intervening in response to extreme currency fluctuations. A recent guide outlined the best brokers for 2025, emphasizing factors like spreads, currency trading, and unique platform features. Recommendations were made for top brokers to trade Gold, Forex, and CFDs, covering regions including MENA and Latin America. FXStreet offers market insights and discusses the risks associated with investments. This content is for informational purposes only and does not constitute investment advice. Potential investors should perform thorough research before making any financial decisions.

Mexican Peso Strategies

Mexico’s private spending has greatly improved, increasing to 1.4% year-over-year in the third quarter after a previous dip. This data, covering up until September, shows domestic demand is stronger than expected. Therefore, we should expect the Mexican peso (MXN) to gain strength against currencies in softer economies. This spending increase occurs alongside persistent inflation, which rose to 4.2% in November. It’s unlikely that the Bank of Mexico will lower its 11.25% policy rate soon, a point they emphasized in their recent meeting. This widening interest rate gap, particularly against the Euro, makes the peso appealing for carry trades. For those looking to benefit from the peso’s appreciation, buying peso futures is a straightforward option, but we need to keep an eye on the strength of the US dollar. A more cautious approach is to buy put options on the USD/MXN pair, set to expire in late January or February 2026. This lets us profit from a stronger peso while minimizing losses if the US Federal Reserve keeps its aggressive stance. Implied volatility on USD/MXN options remains relatively low, around the 1-year low of 10.8% observed last month. This suggests the market might not be fully accounting for potential sharp movements, given the solid Mexican data and a strong US dollar. Buying straddles could be a smart strategy as year-end transactions slow down and institutional players return. Create your live VT Markets account and start trading now.

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