USD/MXN moves sideways ahead of US Nonfarm Payrolls, lingers near 16.90
- USD/MXN consolidates as traders await the crucial labor market indicators.
- The US Dollar Index (DXY) attempts to halt its losing streak that began on March 1.
- Mexico’s 12-Month Inflation rose by 4.40% in February, compared to a 4.88% rise in January.
USD/MXN consolidates with reduced volatility, which could be attributed to investors exercising caution ahead of the scheduled release of US Nonfarm Payrolls and other employment data on Friday. The pair trades near 16.90 during the European session on Friday.
The Mexican Peso (MXN) could have faced downward pressure following the release of the country's 12-Month Inflation, rising by 4.40% in February. This figure marked a decline from a seven-month high of 4.88% rise in January and was slightly lower than the forecasted increase of 4.42%.
The Bank of Mexico (Banxico) reported that Core Inflation increased by 0.49%, higher than the previous 0.40% rise. However, Headline Inflation rose by 0.9%, which was lower than the expected 0.11% and the previous 0.89% increase.
On Thursday, US Initial Jobless Claims remained steady at 217K for the week ending on March 1, despite expectations of 215K. Meanwhile, US Nonfarm Productivity maintained a consistent growth rate of 3.2% in the fourth quarter of 2023, slightly surpassing market expectations of 3.1%.
On Friday, US Nonfarm Payrolls are projected to report 200K new jobs created in February, compared to 353K previously, potentially reinforcing market expectations of a Federal Reserve (Fed) rate cut in June. Federal Reserve Chair Jerome Powell hinted at the possibility of interest rate cuts occurring sometime in 2024. The CME FedWatch Tool suggests a 56.7% likelihood of a 25-basis points rate cut in June. These factors are collectively exerting downward pressure on the US Dollar, consequently undermining the USD/MXN pair.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
