The Mexican Peso is off to a rocky start in September, dropping over 0.50% as fears of judiciary reform approval loom with the new Mexican Congress in session. The USD/MXN pair is currently trading at 19.80, after a sharp climb from its daily low of 19.60.
In economic news, Mexico’s Business Confidence saw a slight improvement in August, while the Manufacturing PMI hit a two-year low, indicating challenges in the sector. S&P Global highlighted weak sales, competition from China, and highway insecurity as key issues for Mexican manufacturers.
Economics Associate Director at S&P Global Market Intelligence, Pollyanna De Lima, commented on the tough month for Mexican manufacturers, citing subdued sales and concerns about competition and security.
On the other side of the border, Wall Street is closed for Labor Day, with traders anticipating the release of employment data later in the week. Nonfarm Payrolls for August are expected to exceed July’s numbers.
Inflation in the US remains stable, with the Core Personal Consumption Expenditures Price Index holding steady at around 2.5% year over year.
Daily Digest Market Movers: Mexican Peso on the Defensive Amid Political Turmoil
- Business Confidence improved slightly in August but remains below peak levels seen earlier this year.
- Manufacturing PMI contracted for the second consecutive month, signaling a deeper economic slowdown in Mexico.
- Expectations of rate cuts by the Bank of Mexico could further pressure the Mexican Peso, which has already depreciated significantly this year.
- USD/MXN rally continues on judiciary reform fears, leading to a flight to safety in the US Dollar.
- Political tensions, including strained relations with the US and Canada, are also impacting the Mexican Peso.
- US Nonfarm Payrolls data for August and expectations of rate cuts by the Fed are key factors to watch.
Technical Outlook: Mexican Peso Weakens as USD/MXN Climbs Above 19.70
The USD/MXN pair remains in an uptrend, consolidating between 19.50 and 20.00. Momentum indicators suggest further upside potential, with resistance levels at 20.22, 20.57, and 20.82. Support levels are at 19.50, 19.02, and 18.62.
Mexican Peso FAQs
- The Mexican Peso is influenced by the country’s economy, central bank policy, foreign investment, remittances, geopolitical trends, and oil prices.
- Banxico aims to maintain low and stable inflation through interest rate adjustments, impacting the value of the Peso.
- Macroeconomic data releases and economic indicators play a crucial role in determining the strength of the Mexican Peso.
- MXN tends to perform well during risk-on periods and weakens during market turbulence or uncertainty.
Overall, the current economic and political landscape in Mexico is impacting the value of the Mexican Peso. Investors should keep an eye on key indicators and developments to navigate the market effectively.