Background on Key Figures and Institutions
The Mexican peso has experienced a decline against the US dollar following recent employment data from the United States and threats made by President Donald Trump. The Federal Reserve (Fed), a crucial institution in the US, is expected to maintain its interest rate during its upcoming meeting.
Employment Data and Fed’s Interest Rate
The growth in employment in the United States slowed more than anticipated in December, amid cautious business behavior. The non-agricultural payrolls added only 50,000 new jobs last month. Despite this, the unemployment rate in the US dropped to 4.4%.
These figures support the expectation that the Fed will keep its interest rate unchanged in its forthcoming meeting. The central bank has increased rates by 25 basis points in the last three gatherings, but market speculation suggests a pause at the start of this year.
Geopolitical Factors Affecting the Peso
Market participants are closely monitoring geopolitical events in the region, following US actions in Venezuela that led to the capture of Nicolás Maduro. There is ongoing discussion about the possibility of a US military intervention in Mexico against drug cartels, as implied by Donald Trump.
“Today, the peso is influenced by heightened market anxiety after US President Donald Trump threatened a potential military intervention in Mexico. Support and resistance levels are currently at 17.95 and 18.07,” stated Monex.
Weekly Performance of the Peso
The Mexican peso has also had a negative weekly performance. Compared to last Friday’s close of 17.9142 units per dollar, the accumulated loss amounts to 8.04 cents, equivalent to a 0.45% decrease.
Key Questions and Answers
- Q: What factors are causing the Mexican peso to fall against the US dollar?
A: The Mexican peso is falling due to a combination of recent US employment data and threats made by President Donald Trump regarding a potential military intervention in Mexico.
- Q: How does the US employment data impact the Mexican peso?
A: The slower-than-expected growth in US employment, coupled with a falling unemployment rate, supports the expectation that the Federal Reserve will maintain its interest rate. This, in turn, affects the Mexican peso.
- Q: What geopolitical events are influencing the Mexican peso?
A: Geopolitical factors, such as US actions in Venezuela and speculation about a possible military intervention in Mexico by Donald Trump, are contributing to market anxiety and negatively impacting the Mexican peso.
