The best time to trade the Mexican peso (MXN) is usually in the morning, when many financial markets are open and a steady stream of news is flowing. The currency is not in the top 10 based on global liquidity and is well behind the U.S. dollar (USD), euro (EUR), Japanese yen (JPY), and British pound sterling (GBP). Traders typically focus on the peso in relation to other currencies, and the USD/MXN currency pair accounts for the bulk of activity in the peso.

Key Takeaways

  • The Mexican peso (MXN) is not as actively traded as the euro or the U.S. dollar (USD), but the currency offers highly liquid access to Latin American markets.
  • The USD/MXN currency pair accounts for the bulk of trading activity in the peso.
  • The best time for MXN trading is typically in the morning, when financial markets are open and there is a steady flow of economic news.
  • Bid-ask spreads tend to widen during quiet periods and narrow when trading is more active.

U.S. Dollar vs. Mexican Peso

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

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

Mexican Peso Price Catalysts

As a top-15 oil-producing country, Mexico is tied to its natural resources, with the peso showing a tight correlation with other commodity-based currencies, including the Brazilian real (BRL) and the Colombian peso (COP). This interdependence increases the importance of energy fluctuations as well as of data that moves crude oil and natural gas futures markets. The weekly U.S. oil inventory report, released at 10:30 a.m. ET on Wednesdays, 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 U.S. 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 México 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 interdependence between the two nations. Forex traders need to stay alert on release day, because the policy update can come at any time.

Interest Rate Update

On June 25, 2021, Banco de México raised interest rates from 4.00% to 4.25%. Analyst expectations had been for unchanged.

Economic Releases

The majority of Mexico’s economic data is released at 9 a.m. or 10:30 a.m. 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 with the start of the U.S. trading day, drawing in significant volume in both venues. 

U.S. economic releases at 8:30 a.m. and 10 a.m. 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

Mexican peso 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 in the U.S. 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’s Federal Open Market Committee (FOMC) releases interest rate decisions or minutes from prior meetings. The European Central Bank (ECB) can also cause a spike in MXN activity, especially when the highly popular EUR/USD pair experiences a substantial move.

The Bottom Line

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