- USD/MXN sees strong gains on cooling inflation data from Mexico.
- Weaker PMI and ADP figures suggest potential challenges for the US labor market and economic growth.
- USD/MXN Price Analysis: A daily close above the 20-day EMA could lead to a rally towards the 100-day EMA at 18.8382.
The Mexican Peso (MXN) depreciated vs. the US Dollar (USD) as market sentiment shifted sour. A raft of economic data from the United States (US) and Mexico spurred a jump in the exchange rate. At the time of writing, the USD/MXN is trading at 18.3469
USD/MXN climbs as Mexico’s inflation cools down
Wall Street is trading mixed, with the S&P 500 and the Nasdaq posting losses while the Dow Jones climb. The USD/MXN is registering solid gains on data from Mexico, showing that inflation is cooling down. Data from INEGI showed that inflation rose by 6.85% YoY, below estimates of 6.90%, as revealed by a Reuters poll. Core inflation, which excludes volatile items, cooled from 8.09% to 8.09% annually.
Last week, Banxico (the Mexican central bank) raised rates by 25 bps moderating the pace of tightening. Analysts expect Banxico to keep rates unchanged at around 11.25%,
On the US front, the ISM Non-Manufacturing PMI dropped to 51.2, which is lower than the anticipated 54.4 and falls short of the previous month’s reading of 55.1. The decline is attributed to a decrease in new orders growth and less robust business activity. Meanwhile, February ADP figures showed private hiring increased by 145K, below the expected 200K, trailing January’s upwardly revised figure of 261K.
Given the latest round of labor market metrics pointing to deterioration, a jump in Initial Jobless Claims for the latest week could open the door for a weaker US Nonfarm Payrolls figure. Analysts predict that the number of payrolls for March will be around 240K, which is lower than February’s figure of 311K.
USD/MXN Technical analysis
The USD/MXN appears to have bottomed at around 18.0000. USD/MXN weekly gains above 2% spurred a rise from 17.9644 toward 18.4000, exposing the 20-day Exponential Moving Average (EMA) at 18.3329. A daily close above the latter could exacerbate a rally towards the 100-day EMA At 18.8382, but firstly, buyers need to clear the 50-day EMA At 18.5235. On the other hand, a dip below the 20-day EMA and the USD/MXN could re-test 18.0000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD failed just ahead of the 200-day SMA
Finally, AUD/USD managed to break above the 0.6500 barrier on Wednesday, extending the weekly recovery, although its advance faltered just ahead of the 0.6530 region, where the key 200-day SMA sits.
EUR/USD met some decent resistance above 1.0700
EUR/USD remained unable to gather extra upside traction and surpass the 1.0700 hurdle in a convincing fashion on Wednesday, instead giving away part of the weekly gains against the backdrop of a decent bounce in the Dollar.
Gold stays firm amid higher US yields as traders await US GDP data
Gold recovers from recent losses, buoyed by market interest despite a stronger US Dollar and higher US Treasury yields. De-escalation of Middle East tensions contributed to increased market stability, denting the appetite for Gold buying.
Ethereum suffers slight pullback, Hong Kong spot ETH ETFs to begin trading on April 30
Ethereum suffered a brief decline on Wednesday afternoon despite increased accumulation from whales. This follows Ethereum restaking protocol Renzo restaked ETH crashing from its 1:1 peg with ETH and increased activities surrounding spot Ethereum ETFs.
Dow Jones Industrial Average hesitates on Wednesday as markets wait for key US data
The DJIA stumbled on Wednesday, falling from recent highs near 38,550.00 as investors ease off of Tuesday’s risk appetite. The index recovered as US data continues to vex financial markets that remain overwhelmingly focused on rate cuts from the US Fed.