Background on Key Figures and Institutions
The Mexican peso weakened against the U.S. dollar on Thursday, as government activities in the United States remain partially paralyzed since late Tuesday night. This shutdown threatens to delay the release of a crucial employment report expected at week’s end, which will influence the Federal Reserve’s future actions.
Lorie Logan, President of the Federal Reserve Bank of Dallas, recently advised caution regarding further interest rate cuts. She highlighted that inflation surpasses the target and is rising, contrary to expectations of additional rate reductions.
Market Reactions and Economic Indicators
The Mexican peso fell 0.31% or 5.66 centavos to 18.4252 units per dollar, compared to the previous day’s close of 18.3686 units according to official data from Banco de México (Banxico).
The dollar’s price ranged from a high of 18.4697 pesos to a low of 18.3400 pesos. The Intercontinental Exchange’s Dollar Index (DXY), which compares the U.S. dollar to a basket of six currencies, increased by 0.15% to 97.90.
Impact of U.S. Government Shutdown
The partial government shutdown in the United States has led to concerns over delayed publication of an anticipated employment report, crucial for determining the Federal Reserve’s next steps. On Wednesday, it was reported that private sector employment in the U.S. decreased unexpectedly last month, reinforcing expectations for interest rate cuts.
Due to the government shutdown, weekly jobless claims data was not released on Thursday.
Lorie Logan’s Cautionary Remarks
In response to comments from Lorie Logan, President of the Federal Reserve Bank of Dallas, market operators showed restraint regarding further interest rate reductions. Logan emphasized that inflation exceeds the target and is increasing, contrary to expectations of additional rate cuts.
Expert Analysis
Felipe Mendoza, ATFX LATAM’s market analyst, stated: “The day’s activity in the foreign exchange market reflected adjustments, as the absence of significant macroeconomic data left the peso vulnerable to external factors and speculative movements.”
Key Questions and Answers
- What caused the Mexican peso to weaken against the U.S. dollar? The peso weakened due to a stronger U.S. dollar, driven by increased risk aversion caused by the partial government shutdown in the United States.
- What is the significance of the U.S. government shutdown? The shutdown threatens to delay the release of a crucial employment report, which will influence the Federal Reserve’s future actions.
- What did Lorie Logan, President of the Federal Reserve Bank of Dallas, advise regarding interest rates? Logan urged caution on further interest rate cuts, citing that inflation surpasses the target and is rising.
- How did recent employment data impact market expectations? Unexpectedly lower private sector employment in the U.S. last month reinforced expectations for interest rate cuts.
