Background on the Mexican Peso and its Significance
The Mexican peso continues to strengthen against the US dollar on Tuesday morning. The local currency has reached a new high for the year, as market participants process expected reports on US retail sales and labor market conditions.
Current Exchange Rate
The spot exchange rate is currently at 17.9409 pesos per dollar, marking a 4.03-cent improvement (or 0.22%) compared to Monday’s close of 17.9812 pesos per dollar, according to official data from Mexico’s central bank (Banxico).
The dollar is trading within a range, with a high of 18.0017 pesos and a low of 17.9323 pesos. The Intercontinental Exchange’s Dollar Index (DXY), which compares the dollar to a basket of six reference currencies, fell by 0.33% to 97.96 units.
Key Figures from the US
US retail sales remained stable in October, while consumer spending began the fourth quarter despite rising inflation that has forced households to cut back on expenses. Economists had anticipated a 0.1% increase.
The US job growth rebounded in November after non-agricultural payrolls decreased in October due to public spending cuts. However, the unemployment rate stood at 4.6% as the labor market weakened.
- Non-agricultural payrolls increased by 64,000 jobs last month, according to the statistics office, but the economy lost 105,000 jobs in October due to federal employees leaving under Donald Trump’s initiative to shrink government.
Investor Focus on Interest Rates
Following the release of these figures, the dollar retreats as investors seek clues about the future trajectory of the Federal Reserve’s interest rate. A weakening economy favors an accommodative policy, though market participants do not anticipate a rate cut imminently.
IMB Capital Quants states that weak figures reinforce the narrative of a slowing US economy and support further peso appreciation, potentially pushing it to the 17.90-17.95 range. Monex identifies support at 17.88 and resistance at 18.05.
Key Questions and Answers
- What is the current exchange rate of the Mexican peso to the US dollar? The spot exchange rate is currently at 17.9409 pesos per dollar.
- Why is the Mexican peso gaining strength against the US dollar? The peso is strengthening due to expected reports on stable US retail sales and a rebounding job market, which supports an accommodative monetary policy stance by the Federal Reserve.
- What are the key figures from recent US economic reports? US retail sales remained stable in October, and although consumer spending started the fourth quarter amidst inflation, economists had anticipated a 0.1% increase. The US job growth recovered in November, but the unemployment rate rose to 4.6% due to a weakening labor market.
