• The Mexican Peso edges lower as markets turn risk-off following a disappointing stimulus announcement in China. 
• The Peso may see losses curbed, however, by increasing investor confidence in the new Sheinbaum administration. 
• USD/MXN breaks below the key 50-day SMA and tests the bottom of a major rising channel. 

The Mexican Peso (MXN) pulls back in its key pairs after an over-week-long uptrend on Tuesday as an overall risk-off mood permeates markets, which, in turn, weighs on the risk-sensitive Peso. 

During the Asian session, after a bright start, Chinese stocks fell on the news that a highly-anticipated briefing by the Chinese state planner had failed to deliver the expected levels of investment.  

Mexican Peso edges lower on risk-off tone to markets

The Mexican Peso edges lower on Tuesday on the back of increasingly negative market sentiment triggered by disappointing news out of Beijing. In common with other emerging-market currencies, the Mexican Peso tends to weaken when the global outlook turns sour. 

An opening-bell rally in China’s benchmark CSI 300 equity index was abruptly cut short after the China National Development and Reform Commission (NDRC) Chairman Zheng Shanjie announced only $28 billion in extra funds to local governments on Tuesday. 

Despite following the huge package of measures announced by the People’s Bank of China (PBoC) last week, which constitutes the largest liquidity pump since the Covid pandemic, investors deemed the additional fiscal stimulus inadequate for China to hit its growth targets for the year. 

Asian stocks pared their early gains on the news, while commodities weakened substantially as a result of a weaker global growth outlook, and European stocks are trading in the red after their opening.