Peso under mild pressure ahead of Banxico and PCE; market in wait-and-see mode

Good morning!

The day's signal: pre-event compression with futures recovering

This Thursday, June 25th, has the classic signature of a market unwilling to take bold positions ahead of key data. The S&P 500 closed at 7,358 (-0.10%) — a cosmetic decline — but ES futures are already recovering +0.86% in premarket, signaling that the previous session's risk-off lacked conviction. VIX at 17.81 and MOVE at 69.06 confirm there's no capitulation or structural panic: implied volatility is low in equities and moderate in rates. Gold at $4,029 (+0.97%) is rising, but not at the pace it would in a genuine risk-off move — it's more a reflection of diversification flows and a relatively weak dollar with DXY at 101.51. WTI falls -1.41% to $69.35, pressuring commodity-linked currencies, though the direct impact on the peso is secondary.

The peso and carry: 17.60 with resistance in sight

USD/MXN trades at 17.60 (+0.29%), and the most relevant technical data point is its proximity to resistance at 17.6732 — just 69 pips away. Support holds firm at 17.1459. The tactical question is whether the market has a catalyst to execute that breakout today, and the honest answer is: probably not, since institutional players will wait for tomorrow's PCE + Banxico combination before moving sized positions.

The carry differential holds at 2.87pp (Banxico 6.50% vs Fed 3.63%, TIIE28 at 6.75%). In an environment where DXY isn't in violent rally mode and USD/MXN realized vol sits at 7.69% — relatively contained — that differential still justifies a constructive bias on the peso. My market view in this context: if Banxico cuts 25bps tomorrow and the communication maintains a cautious/gradual tone, carry remains attractive enough for the peso to withstand moderate pressure. A 50bp cut or surprisingly dovish language would materially change the picture.

Rates and curve: the 10Y relaxes, a positive curve sends a cautious signal

The UST 10Y at 4.37% fell -1.89% on the day — a welcome relief for emerging markets. The 2s10s curve is positive at +0.34pp (2Y at 4.16%, 10Y at 4.50%), meaning it's technically no longer inverted. That matters: a normalized curve removes the imminent recession signal, but steepening from the long end (30Y at 4.94%) can also be read as the market demanding a term premium for long-term US fiscal uncertainty. For the peso, today's 10Y relaxation is marginally supportive.

The forward scenario: tomorrow sets the short-term range

The next 24 hours' calendar is dense. Tomorrow's US PCE (Friday, June 26) will determine whether the disinflation narrative remains intact or whether the Fed needs to recalibrate its pause. A hot PCE strengthens DXY and complicates the peso. Simultaneously, the Banxico rate decision will define the short-term carry profile: consensus points to a 25bp cut, but the market will closely watch the statement and the risk balance. The next major checkpoint is the July 3rd NFP, which could reshape the Fed rate narrative for the summer.

In this context, the Risk On Score of 55/100 — CONSTRUCTIVE state — is an honest reading: neither euphoria nor capitulation. Carry exists, volatility is contained, equity futures are recovering. But the peso's technical resistance is nearby and tomorrow's events are binary. Today is a consolidation day, not one for aggressive directional bets.

— See you tomorrow for Friday's view.