Overview of the Current Economic Scenario
The Mexican peso has been losing ground against the US dollar for the second consecutive day on Thursday. The local currency is weakening as the greenback strengthens following better-than-expected US employment figures and economic growth data.
Current Exchange Rate
The spot exchange rate is currently at 18.4562 pesos per dollar, marking a decrease of 2.86 centavos or 0.16% compared to the previous day’s closing rate of 18.4276 pesos, according to data from Mexico’s central bank, Banxico.
The dollar’s price is fluctuating between a high of 18.4939 pesos and a low of 18.4019 pesos, while the Intercontinental Exchange’s Dollar Index (DXY) rises by 0.44% to 98.30 units.
Positive US Economic Figures
The Department of Labor reported that initial jobless claims stood at 218,000 last week, below the expected 235,000 and lower than the previous week’s figures. This positive data comes alongside a revised GDP growth rate of 3.8% for the second quarter, surpassing analysts’ expectations of 3.3%.
Additionally, orders for durable goods increased by 2.9% in August, further bolstering the positive economic outlook for the United States.
Following these data releases, the dollar index reached a three-week high as investors anticipate future interest rate decisions by the Federal Reserve, given recent employment data showing weakness.
Investors will closely monitor the Personal Consumption Expenditure (PCE) price index, released tomorrow, to gauge potential Fed actions. Meanwhile, futures indicate an 83.4% probability of a 25-basis-point rate cut by the Fed in the upcoming meeting, down from 92% yesterday.
Expectations for Banxico’s Monetary Policy Decision
Besides the strengthening dollar due to positive US economic figures, the Mexican peso is weakening as market participants await the Banxico’s monetary policy announcement later today. A 25-basis-point rate cut, bringing the reference rate to 7.5%, is widely anticipated.
“The peso is losing ground against the dollar as investors await Banxico’s monetary policy decision, where a 25-basis-point rate cut and increased clarity on future decisions are expected,” Monex stated.
Key Questions and Answers
- What is causing the Mexican peso to weaken against the US dollar? The peso is losing ground due to a strengthening US dollar, which is supported by better-than-expected employment figures and economic growth data from the United States.
- What recent US economic figures have surpassed expectations? Initial jobless claims in the US came in at 218,000 last week, surpassing expectations of 235,000. The revised GDP growth rate for the second quarter was 3.8%, higher than analysts’ forecast of 3.3%. Additionally, orders for durable goods increased by 2.9% in August.
- What is the anticipated action from the Federal Reserve regarding interest rates? Market expectations suggest an 83.4% probability of a 25-basis-point rate cut by the Federal Reserve in the upcoming meeting.
- What decision is Banxico expected to make regarding monetary policy? Market participants anticipate a 25-basis-point rate cut by Banxico, which would bring the reference rate to 7.5%.
