USD/MXN falls toward the 18.1000 area, following a solid US NFP report

The USD/MXN slumps to a two-day low after a US jobs report was below estimates but showed that the labor market is still resilient. Contrarily to most G7 FX currencies, the Mexican Peso (MXN) stood tall against the US Dollar (USD). At the time of typing, the USD/MXN trades volatile within the 18.1500-18.1000 range, below its opening price.

USD/MXN drops after the US jobs report

On a thin liquidity trading session in observance of the Good Friday holiday, the US Department of Labor revealed that the United States (US) economy added fewer jobs than estimated. Figures came at 236K, below the consensus of 240K, and trailed the revised 326K February’s data. Digging deeper into the data, Average Hourly Earnings decreased to 4.2% YoY, beneath forecasts of 4.3%, and the Unemployment Rate was 3.4% YoY, 0.2% lower than the anticipated 3.6%.

The data pushed recessionary fears away, with US equity futures rising, after the release of the US Nonfarm Payrolls report.

US Treasury bond yields are climbing as traders began to price in a May rate hike, with the US 2-year T-bond yield, the most sensitive to interest rates, rising 18 basis points, at 3.966%, a whisker below 4%. The swaps market shows odds for a 25 bps increase at 70.7%, compared to Thursday’s 49.2%, as demonstrated by the CME FedWatch Tool.

USD/MXN 1-Hour Chart Reaction

The USD/MXN initial reaction was upwards to 18.2669 before shifting gears and collapsing below the S1 daily pivot point, which lies at 18.1630, extending its losses toward 18.1002, shy of cracking the S2 pivot at 18.0919. Since then, the USD/MXN settled at around 18.1229, in between the S1 and S2 pivot point levels.