The Mexican peso (MXN) ranks eighth in global liquidity, well behind the U.S. dollar (USD), euro (EUR), Japanese yen (JPY), and British pound sterling (GBP). Forex traders speculate on MXN strength and weakness through currency pairs that establish comparative value in real-time. The vast majority of forex traders focus on the USD/MXN cross.

In recent decades, MXN has transformed from a sleepy developing-world currency into an international financial instrument. While USD/MXN attracts fewer participants than do major pairs, including the euro (EUR/USD) and yen (USD/JPY), the cross offers highly liquid access to Latin America, as well as opportunities created by emerging market growth and weakness.

The currency pair trades continuously from Sunday evening to Friday afternoon in the United States, offering significant opportunities for profit. However, volume and volatility can fluctuate greatly in each 24-hour cycle, with spreads widening during quiet periods and narrowing during active periods. While the ability to open and close positions at any time marks a key forex benefit, the majority of trading strategies unfold during active periods.

Mexican Peso Price Catalysts

As the ninth-largest oil producer in the world, Mexico is tied to its natural resources, with the peso showing tight correlation with other commodity-based currencies, including the Brazilian real (BRL) and Colombian peso (COP). This inter-dependence increases the importance of energy fluctuations as well as data that moves crude oil and natural gas futures markets. The weekly U.S. oil inventory report released 10:30 AM US ET Wednesday can have a particularly strong effect on USD/MXN.

The best times to trade the Mexican peso track the release of economic data as well as open hours at equity, options, and futures exchanges. Planning ahead requires two-sided research because local and United States catalysts will move USD/MXN with equal intensity. In addition, the peso will often trade in lockstep with other commodity crosses, with energy and natural resource catalysts on the other side of the planet impacting local price action. 

Banco de Mexico meets eight times per year to address monetary policy and announce policy updates through press releases. The majority of meetings are scheduled 24 to 72 hours after the U.S. Federal Reserve issues its decisions, highlighting the inter-dependence between the two nations. Forex traders need to stay alert throughout release-day business hours because the policy update can come at any time.

Economic Releases

The majority of Mexico's economic data is released at 9:00 AM or 10:30 AM U.S. ET. The time segment from 30 to 60 minutes prior to these releases and one to three hours afterward is an enormously popular period to trade USD/MXN because it also overlaps the start of the U.S. trading day, drawing in significant volume in both venues. 

U.S. economic releases at 8:30 AM and 10:00 AM ET generate extraordinary trading volume as well, with high odds for trending movements. USD/MXN volume drops precipitously between Asian and European market hours, but energy-based data can still trigger a flurry of trading activity.  

Equity Exchange Hours

MXN trading schedules roughly follow U.S. exchange hours, increasing activity when New York equity markets and Chicago futures and options markets are open for business. This localization generates an increase in trading volume when the sun rises on the U.S. East Coast and continues into the late afternoon hours.

Central bank agendas can shift this activity cycle, with forex traders staying at their desks when the Federal Reserve (FOMC ) releases a 2:00 PM interest-rate decision or the minutes of the prior meeting. European Central Bank (ECB) releases at 7:45 AM can also spike MXN activity, especially when the highly popular EUR/USD pair heads into a strong trend.

The Bottom Line

The USD/MXN forex pair offers Mexican peso traders a variety of both short-term and long-term opportunities. The best times to trade this instrument are before, and after economic releases, scheduled at 9:00 AM and 10:30 AM ET in Mexico and 8:30 AM and 10:00, AM ET in the U.S. This reporting schedule keeps the forex pair active and liquid throughout U.S. equity and futures exchange hours.