The Mexican Peso Soars Following Strong US Jobs Data
- US Nonfarm Payrolls report for September surpasses expectations, boosting the Mexican Peso.
- Unemployment in Mexico rises, but Automobile Exports and Production show growth.
- US Unemployment Rate decreases, easing concerns of a looming recession.
- Expectations for a 25 bps rate cut by the Federal Reserve in upcoming meetings.
On Friday, the Mexican Peso gained ground against the US Dollar, driven by a stellar jobs report in the US that allayed fears of a recession in the world’s largest economy. Despite some controversial measures by President Claudia Sheinbaum’s government, market participants remain optimistic about a “market-friendly” approach. The USD/MXN pair is currently trading at 19.17, down 0.83%.
Key Market Developments
Following the release of the US Nonfarm Payrolls data for September, which exceeded expectations and also saw upward revisions for July and August figures, Wall Street rallied. The decrease in the Unemployment Rate brought relief to the Federal Reserve, which had previously cut rates by 50 basis points in September due to employment-related risks. This positive news boosted the US Dollar against most major currencies, except the Mexican Peso, which is poised to end the week with over 2% gains.
Market sentiment also shifted towards a more moderate Fed rate cut, with expectations now leaning towards a 25 bps reduction in the next few meetings. Notably, Bank of America revised its call from a 50 to a 25 bps cut in November. Chicago Fed President Austan Goolsbee expressed confidence in the US job market and hinted at potential rate decreases over the next 18 months.
Meanwhile, in Mexico, the latest jobs report indicated a slight uptick in the Unemployment Rate for August. However, there was positive news in the form of increased Automobile Exports and Production in September, according to the Instituto Nacional de Estadistica, Geografia e Informatica (INEGI).
Daily Market Insights
- Auto Production and Exports in Mexico saw growth in September, with production up by 11.71% and exports increasing by 4.8%.
- Mexico’s Jobless Rate for August rose to 3% from July’s 2.9%.
- US Nonfarm Payrolls expanded by 254K in September, surpassing estimates and showing a decline in the Unemployment Rate.
- Banxico’s survey revealed downward revisions in inflation expectations, with the USD/MXN exchange rate projected to end 2024 at 19.69.
USD/MXN Technical Analysis
The USD/MXN pair’s upward trend is in question as it broke below the 50-day Simple Moving Average (SMA) at 19.33, with the Relative Strength Index (RSI) signaling a bearish shift. Support levels to watch include the 50-day SMA, the September 24 swing low of 19.23, and the September 18 daily low of 19.06. On the upside, resistance levels are at 19.50 and 19.82.
Mexican Peso FAQs
- Factors influencing the Mexican Peso include the country’s economy, central bank policy, foreign investment, remittances, and geopolitical trends.
- Banxico’s main goal is to maintain inflation at low and stable levels through interest rate adjustments.
- Macroeconomic data and market sentiment play a crucial role in determining the value of the Mexican Peso.
- The Mexican Peso performs well during low-risk periods and tends to weaken in times of market turbulence.