- USD/MXN remains depressed, falling 3.54% weekly due to the Mexican Peso’s strength.
- The rise in US unemployment claims cement the case for a Federal Reserve’s pause as the labor market cools.
- The Bank of Mexico is expected to raise rates by 25 bps, and then a pause is foreseen.
In the North American session, the USD/MXN is almost flat on Thursday after the Mexican Peso (MXN) failed to push through the 18.00 figure. However, the Mexican currency prints gains vs. the US Dollar (USD) of 3.54% amidst ongoing optimism amongst investors that the US Federal Reserve will end its tightening cycle. The USD/MXN is trading at 18.0860.
USD/MXN is almost flat, with traders awaiting Banxico’s move
Sentiment remains upbeat as Wall Street trades in the green. The greenback continues to weaken to fresh weekly lows, as shown by the US Dollar Index (DXY), but MXN bulls stay on the sidelines, awaiting Banxico’s decision.
Data from the United States (US), amongst other reasons, keep the US Dollar pressured. Initial Jobless Claims for the week ending March 25 jumped by 198,000, higher than the predicted 196,000, the Department of Labor (DoL) reported. Meanwhile, the US Commerce Department disclosed the final reading of the Gross Domestic Product (GDP) for Q4 2022, which fell slightly below the estimated 2.7% at 2.6%.
The rise in US unemployment claims is more than welcomed by the Federal Reserve as it scrambles to curb elevated inflation. If the labor market continues that trend, that will help to drop inflation. However, it’s premature to call victory, as the Fed’s preferred gauge for inflation will be revealed on Friday. The Core Personal Consumption Expenditure (PCE) is estimated at 4.7% YoY.
On the Mexican front, most analysts expect Banxico’s last interest rate hike of its tightening cycle of 25 bps, leaving the TIIE at 11.25%. TD Securities Senior Latam Strategist Joel Virgen Rojano wrote in a note, “We expect Banxico to hike in 25bps on March 30 and hit terminal at 11.25%. We think the bar is high for the central bank to contradict its own forward guidance once again.”
Regarding the future of the Mexican Peso after Banxico’s decision, Virgen Rojano added, “We do not expect a meaningful MXN reaction to Banxico’s decision as we think it has been mostly priced in. However, we expect a gradual weakening of MXN against the USD in the coming months."
USD/MXN Technical levels
|Today last price||18.0824|
|Today Daily Change||-0.0085|
|Today Daily Change %||-0.05|
|Today daily open||18.0909|
|Previous Daily High||18.2423|
|Previous Daily Low||18.0681|
|Previous Weekly High||19.2324|
|Previous Weekly Low||18.3797|
|Previous Monthly High||19.2901|
|Previous Monthly Low||18.2954|
|Daily Fibonacci 38.2%||18.1346|
|Daily Fibonacci 61.8%||18.1757|
|Daily Pivot Point S1||18.0253|
|Daily Pivot Point S2||17.9596|
|Daily Pivot Point S3||17.8511|
|Daily Pivot Point R1||18.1994|
|Daily Pivot Point R2||18.3079|
|Daily Pivot Point R3||18.3735|
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.
Follow us on Telegram
Stay updated of all the news
EUR/USD retreats below 1.0700 after upbeat US employment data
EUR/USD has lost its recovery momentum and retreated slightly below 1.0700 in the early American session on Thursday. After the monthly data published by the ADP showed that private sector payrolls rose 278,000 in May, the US Dollar found support and forced the pair to edge lower.
GBP/USD pulls away from daily highs, stays above 1.2450
GBP/USD has edged lower from the daily high it set above 1.2480 but managed to stay above 1.2450. Although the US Dollar stays resilient against its rivals after the better-than-expected private sector employment data, the risk-positive market atmosphere helps the pair hold its ground.
Gold stays in daily range above $1,960 as US yields puch lower
Gold price declined below $1,960 in the early American session but didn't have a hard time rising back above that level. Despite the upbeat ADP employment data from the US, the 10-year US Treasury bond yield stays in the red well below 3.7%, providing a lift to XAU/USD.
Bitcoin likely to remain in red through the next quarter if history is any indication
Bitcoin (BTC) price produced a monthly close at $27,210, noting a -6.92% return for May. The last-minute slide in BTC put an end to the four-month bullish streak that kickstarted the 2023 rally.
C3.ai gets punched in the face, is the AI hype a bit overdone?
OMG! Stocks sold off on Wednesday….and NVDA? That stock gave back $15 or 3.8% - What is going on? That is not supposed to happen….it can only go up! Quick someone call the NVDA police!