- USD/MXN lost ground as Mexico’s economic data suggests a robust labor market.
- Mexico’s Jobless Rate declined to 2.9% in September from the previous reading of 3%.
- The less likelihood of the Fed increasing interest rate is weighing on the US Dollar.
USD/MXN treads water to retrace the losses registered in the previous session, trading around 18.1600 during the Asian session on Friday. The Mexican Peso (MXN) surged as Mexico’s employment data revealed a robust labor market, showcasing the enduring strength of the Mexican economy.
Mexico’s Jobless Rate dropped to 2.9% in September, down from August’s 3%. Deputy Governor Jonathan Heath of the Bank of Mexico (Banxico) mentioned that the growing government debt in 2024 will add another layer to the inflationary battle, highlighting a desynchronization between monetary and fiscal policies.
Moreover, the upbeat preliminary Gross Domestic Product (GDP) Annualized data from the United States (US) increased to 4.9% in the third quarter. This higher figure compared to the previous reading of a 2.1% expansion and the 4.2% expectations could help the US Dollar (USD) to sustain its upward trajectory.
On the employment side, the US weekly Initial Jobless Claims for the week ending October 21 rose to 210K from the previous 200K, indicating the repercussions of increased interest rates in the US. This scenario may decrease the probability of another interest rate hike by the US Federal Reserve (Fed) through the end of 2023.
The US Dollar Index (DXY) receives downward pressure on the downbeat US Treasury yields observed in the previous session, bidding near 106.60 at the time of writing.
Moreover, the Greenback faced downward pressure following recent dovish remarks from Fed Chair Jerome Powell. The Chief Policymaker stated that the central bank has no immediate plans to raise rates. However, Powell also noted that further tightening of monetary policy could be on the table if there’s substantial evidence of growth exceeding the norm.
Investors await the US Core Personal Consumption Expenditures (PCE) data on Friday, seeking further impetus on the US economic overview.
