Background on the Mexican Economy and Banco de México (Banxico)
The Mexican peso strengthened against the US dollar during Wednesday’s session, recovering from its worst level in two months. Traders were reviewing private employment figures in the United States, which exceeded expectations.
Key Economic Indicators and Their Impact
The exchange rate closed the day at 18.5904 pesos per dollar, up from yesterday’s 18.6563 pesos according to official data from Banxico. This represents a gain of 6.59 centavos or 0.35%.
The dollar’s movement ranged from a high of 18.7702 pesos to a low of 18.5722 pesos. Meanwhile, the Dollar Index (DXY) from the Intercontinental Exchange, which compares the US dollar to six references, fell by 0.03% to 100.18 units.
US Employment Data and Its Relevance
Private sector employment in the United States increased by 42,000 positions in October after a downward revision to 29,000 in September from -29,000. Analysts had forecasted 28,000 new jobs. These figures gain importance due to the lack of official data caused by the government shutdown.
Market Expectations for the Federal Reserve (Fed)
Traders are adjusting their bets on the Fed’s interest rate, which, although reduced, still leans towards a 25-basis-point cut next month with a 63% probability, according to FedWatch by CME.
Market Reactions and Expert Opinions
Juan Carlos Cruz, CEO of México Financiero, stated: “The peso was pressured yesterday due to risk aversion that continued in the Asian session, reaching a high of 18.7702. Upon the American opening, the level retreated. The highest volume was seen at 18.56 and 18.69.”
Banco Base highlighted in their report: “The exchange rate has initiated a gradual upward trend. It’s worth noting that it touched the resistance level of 18.7706 per dollar, and although there was a correction, it opens the door to potential depreciation below 18.8000 pesos.”
Local Economic Developments and Banxico Policy Announcement
The peso improved following a report showing that fixed capital investment fell 2.7% in August compared to July, and dropped by 10.4% year-over-year. Tomorrow, the market anticipates Banxico’s monetary policy announcement.
Key Questions and Answers
- Q: What is the current state of the Mexican peso against the US dollar? A: The Mexican peso has gained ground against the US dollar, recovering from its worst level in two months.
- Q: What factors influenced the recent movement in the exchange rate? A: Traders were reviewing private employment figures in the United States, which exceeded expectations, impacting the exchange rate.
- Q: How do recent US employment data and the Fed’s interest rate expectations affect the Mexican peso? A: The positive US employment data and expectations of a Fed interest rate cut have contributed to the Mexican peso’s recent gains.
- Q: What are market expectations for Banxico’s upcoming policy announcement? A: The market anticipates Banxico’s monetary policy announcement, with traders adjusting their bets on potential interest rate changes.
