Overview of the Mexican Peso’s Stability
The Mexican peso remains largely unchanged against the U.S. dollar on Thursday morning, despite the strengthening of the greenback in a market absorbing new U.S. jobless claims higher than expected and weak retail sales in Mexico.
The spot exchange rate is currently at 18.7565 pesos per dollar, with a variation of less than 0.01% compared to the official closing rate of 18.7562 pesos on the previous day, according to data from Mexico’s central bank, Banxico.
The dollar’s movement is confined between a high of 18.8126 pesos and a low of 18.7308 pesos, while the Dollar Index (DXY) rises 0.26% to 98.51 points, comparing the U.S. currency against a basket of six currencies.
Anticipation of Banxico Minutes and Powell’s Speech
New initial jobless claims in the U.S. increased by 11,000 to reach 235,000 in the week ending August 16, marking the largest jump since late May. Economists had forecasted a figure of 225,000.
Meanwhile, traders are cautiously waiting for Jerome Powell’s speech at the annual Jackson Hole symposium tomorrow, alongside other prominent central bankers worldwide. In local news, traders are keeping an eye on the upcoming release of Banxico’s policy meeting minutes to learn more about the central bank’s discussion that resulted in a moderation of interest rate adjustments.
Decline in Mexican Retail Sales
Earlier, it was reported that Mexico’s retail sales unexpectedly fell 0.4% on a monthly basis last month, with reductions across almost all states in the country. On an annual basis, retail sales increased by 2.3%.
“Today, the Mexican peso corrects part of its decline after assessing the weak retail sales report, which could support a slowdown in underlying inflation,” analysts from Monex Grupo Financiero noted.
From a technical perspective, Banorte experts predict a recovery following the failure of the price line to close above the 18.82 level. The nearest support for the currency could be around 18.70, as mentioned in their report.
Key Questions and Answers
- Q: Why is the Mexican peso stable despite the U.S. jobless claims being higher than expected?
A: Traders are absorbing the new data and focusing on upcoming events, such as Jerome Powell’s speech at the Jackson Hole symposium and the release of Banxico’s policy meeting minutes.
- Q: What caused the unexpected decline in Mexican retail sales?
A: Retail sales fell 0.4% on a monthly basis last month, with reductions across most Mexican states. However, annual retail sales growth was 2.3%.
- Q: How are analysts interpreting the recent economic data?
A: Monex Grupo Financiero’s analysts suggest that the weak retail sales report could support a slowdown in underlying inflation, potentially benefiting the Mexican peso.
- Q: What do technical analysts predict for the Mexican peso’s movement?
A: Banorte experts anticipate a recovery for the peso, with the nearest support level being around 18.70, following the price line’s failure to close above 18.82.
