Background on the US Government Shutdown
The United States has been experiencing its longest federal government shutdown in history, lasting 41 days. This partial government halt has affected various federal operations, including statistical offices. However, the US Senate approved a funding agreement on Monday that aims to restore federal government financing and end the ongoing shutdown.
Path to Resolution
The approved agreement now moves to the House of Representatives, where its leader, Mike Johnson, has expressed interest in passing it as early as Wednesday. Once approved by the House, it will be sent to President Donald Trump for signature.
Mexican Peso Strengthens Against the Dollar
On Tuesday morning, the Mexican peso appreciated against the US dollar for the fourth consecutive trading day. This rise is attributed to anticipation of the US government shutdown coming to an end soon.
- Spot Exchange Rate: The Mexican peso’s spot exchange rate is currently at 18.3347 units per dollar, marking a gain of 0.25% or 4.60 centavos compared to the previous day’s closing rate of 18.3807 units, according to official data from Banco de México (Banxico).
- Dollar Price Range: The dollar’s price fluctuates between a high of 18.3986 units and a low of 18.3332 units.
- DXY Index: The Intercontinental Exchange’s Dollar Index (DXY), which compares the US dollar to six other currencies, decreased by 0.31% to 99.32 units.
Analysts’ Outlook on Peso Recovery
Monex Grupo Financiero’s analysts stated, “Today, the Mexican peso benefits from downward pressure on the dollar following the US Senate’s approval of a funding bill to end the government shutdown.”
Analysts from Banorte anticipate that the peso’s recovery will persist, having broken through a crucial support level at 18.40 pesos per dollar. They further noted, “We expect the recovery to continue, after surpassing the 18.40 pesos per dollar level. In this context, the next significant support level is at 18.30 pesos, and on the upper end, the 18.50 per dollar level.”
Impact of US Holiday on Market Liquidity
Analysts also foresee reduced market liquidity due to the Veterans Day holiday in the United States. Nonetheless, they expect the peso’s recovery to extend beyond this temporary decrease in liquidity.
Key Questions and Answers
- What is the current state of the US government shutdown? The US Senate has approved a funding agreement to end the longest federal government shutdown in history, which has lasted 41 days. The agreement now moves to the House of Representatives for approval before being sent to President Donald Trump for signature.
- How is the Mexican peso performing against the US dollar? The Mexican peso has appreciated against the US dollar for four consecutive trading days, gaining 0.25% or 4.60 centavos, as investors anticipate the end of the US government shutdown.
- What factors may influence market liquidity in the near term? The US Veterans Day holiday on Thursday may lead to reduced market liquidity, but analysts expect the peso’s recovery to persist beyond this temporary decrease in liquidity.
