The Mexican Peso is showing little movement in its trading on Wednesday, following a period of gains on the previous day.
The Peso’s earlier strengthening was driven by stronger-than-expected Mexican jobs data as well as some idiosyncratic factors that affected its counterparts. From a technical perspective, the USD/MXN pair is finding support along a major trendline as it undergoes consolidation within a broader upward trend.
On Tuesday, the Mexican Peso (MXN) witnessed a significant boost in its key currency pairs. Data from Mexico’s National Statistics Agency (INEGI) revealed that the Jobless Rate dropped to 2.5% in October from 2.9% in September, which was well below the market’s expectation of it remaining stable at 2.9%. On a seasonally adjusted basis, the unemployment rate also fell, going from 2.7% to 2.5%.
Against the US Dollar (USD), the Mexican Peso gained a third of a percentage point and closed at 20.33 on Tuesday. This upward movement was also supported by the weakening of the US Dollar. There have been continued expectations that the Federal Reserve (Fed) will cut interest rates in December. A number of Fed speakers have repeatedly conveyed a similar message, stating that they believe the US economy is in a good position and thus interest rates should continue to decline. Lower interest rates tend to be unfavorable for the US Dollar as they lead to a reduction in foreign capital inflows.
When it came to the Euro (EUR), the Mexican Peso rose a quarter of a percentage point and closed at 21.37 on Tuesday. The single currency, the Euro, was under downside pressure due to heightened political risk in France. The minority centrist government of Prime Minister Michel Barnier is facing a vote of no confidence after opposition parties rejected his proposed Budget. If this vote is successful, it would result in the collapse of the French government and trigger political turmoil within one of the key member states of the Eurozone.
Against the Pound Sterling (GBP), the Mexican Peso closed Tuesday up two-tenths of a percent at 25.77. This was because a series of weak data for the UK, such as the lower-than-expected Retail Sales in October and activity data in November, led the markets to factor in a higher probability of the Bank of England (BoE) cutting interest rates before the end of the year.
In summary, while the Mexican Peso had a successful run on Tuesday thanks to multiple factors, it has since settled into a relatively flat trading pattern on Wednesday.
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