Mexican Peso Performance Against US Dollar
- The Mexican Peso gained 0.90% earlier on Friday but erased gains amid a weaker US Dollar.
- The US Dollar Index hit a two-month high before retreating to 103.48, down 0.23% on Friday.
- China’s stimulus measures provided brief support to the Peso.
On Friday, the Mexican Peso showed strength against the US Dollar, initially gaining 0.90% before losing ground due to a weaker US Dollar. This movement was influenced by US economic data released during the week, supporting the Federal Reserve’s gradual approach to policy easing and strengthening the Greenback. The USD/MXN pair currently trades at 19.85, up by 0.20%.
Wall Street experienced gains supported by robust US Retail Sales and unemployment claims data on Thursday. This positive data bolstered the Greenback, leading to a two-month high for the US Dollar Index (DXY) at 103.87 before retreating to 103.48.
Market Insights and Economic Indicators
- Earlier in the week, the Mexican Peso touched a five-week low as USD/MXN reached a high of 20.02.
- The International Monetary Fund (IMF) projected a lower growth rate of 1.5% for the Mexican economy in 2024, compared to previous estimates.
- IMF forecasts suggest a deeper economic slowdown in the coming year, with GDP growth estimated at 1.3%.
- Banxico’s survey indicates expectations of a 50 bps rate cut by the central bank for the remainder of the year.
- US Building Permits for September decreased by -2.9%, falling short of estimates.
- Housing Starts in September dipped by -0.6% compared to August data.
China’s announcement of further stimulus measures provided brief support to the Peso, aimed at boosting the economy and domestic consumption. However, the Federal Reserve is expected to lower interest rates by 25 basis points at the upcoming November meeting, with odds at 92.9% according to CME FedWatch Tool data.
Technical Analysis and Outlook
The USD/MXN pair remains upwardly biased despite a temporary dip to 19.64, indicating buyer interest and potential upside. The Relative Strength Index (RSI) suggests bullish momentum, with resistance levels at 20.22, 20.50, and 21.00 in focus.
If the USD/MXN falls below 19.64, support levels at 19.61, 19.10, and 19.00 could come into play. Technical analysis suggests a bullish outlook for the pair in the near term.
Mexican Peso FAQs
Here are some frequently asked questions about the Mexican Peso:
- The Mexican Peso’s value is influenced by the country’s economic performance, central bank policies, foreign investment, remittances, and geopolitical trends.
- Banxico aims to maintain low and stable inflation levels through interest rate adjustments, impacting the Peso’s value.
- Macroeconomic data releases and market sentiment play a significant role in determining the Peso’s valuation.
- As an emerging-market currency, the Mexican Peso reacts to market risk perceptions and investor sentiment.