The Mexican Peso is experiencing mixed trading on Friday, influenced by data and events in the market. In the UK, investors are analyzing the recent Budget from the new labor government, which led to a rise in Gilt yields but a delayed sell-off in the Pound Sterling before it recovered. The Peso is slightly higher against the US Dollar after the release of US Nonfarm Payrolls data in October, which fell below expectations. This could increase the chances of the Fed implementing interest rate cuts, which is typically negative for the Dollar.
Moreover, the US Institute of Supply Managers Manufacturing Purchasing Manager Index survey data showed a decrease in October, raising concerns about the US economy. However, the rise in the ISM Manufacturing Prices Paid Index suggests inflationary pressures, which could limit the extent of easing by the Fed. These factors could impact the strength of the Mexican Peso. In addition, fears persist that a victory for former President Donald Trump in the US presidential election could lead to increased tariffs on Mexican goods, further affecting the Peso.
Furthermore, moves by the Mexican legislature to limit the power of the Supreme Court could also negatively impact the Peso by raising concerns about the country’s rule of law and its ability to attract foreign investment. Despite Mexico’s surprise growth in Q3, there are expectations of another rate cut by the Bank of Mexico (Banxico) in November. Lower interest rates could attract less capital inflows, putting pressure on the Peso.
The technical analysis shows that USD/MXN faces tough resistance in the 20.00 zone, making it challenging for bulls to push higher. The currency pair seems to have stalled after a bullish pattern, and while there is a possibility of further upside, resistance at 20.00 is a key obstacle. Overall, USD/MXN is still in an uptrend and trading in a rising channel, suggesting a potential continuation higher.
In conclusion, the Mexican Peso’s trading is influenced by various factors such as US economic data, political risks, and interest rate decisions by Banxico. The outcome of the US presidential election and the Fed’s stance on interest rates will also play a significant role in determining the Peso’s strength. Investors will be closely watching upcoming data releases and market events to assess the future direction of the Mexican Peso.
