The USD/MXN rises 0.05% in the day, staying within the operational range of the previous session at 18.92.
The dollar (DXY) index loses 0.81% today, reaching minimal not seen since March 3, 2022.
The United States Production Price Index (IPP) increases 2.6% in May, complying with analysts’ estimates.
Weekly applications for US unemployment subsidy rise to 248,000, standing above market forecasts.
The USD/MXN established a daily minimum in 18.85, attracting buyers who brought parity to a maximum of the day in 18.98. Currently, the USD/MXN trades in 18.92, winning 0.05% daily.
The Mexican weight listed upwards after US economic data.
According to the United States Department of Labor (DOL), the weekly unemployment subsidy applications increased to 248,000 for the week ending on June 7. This figure is equal to the registration observed in the previous week, although it is located above the 240,000 projected by the consensus.
At the same time, the United States Product Price Index (IPP) rose 2.6% year -on -year in May, complying with the expectations of analysts and slightly above 2.5% recorded in the previous period.
After this news, the dollar index (DXY) loses 0.73% on Thursday, reaching minimums not seen since March 3, 2022 in 97.61, spinning two consecutive days upwards.
In this context, the Mexican weight is consolidated within the operational range of the previous session, while the USD/MXN advances 0.04% daily, operating at the time of writing in 18.92.
USD/MXN Price levels
The USD/MXN reacted down from a short -term resistance given by the maximum of May 30 in 19.43. The next key resistance is observed in 19.78 Maximum of May 6 in convergence with the recoil at 38.2% of Fibonacci. Downwards, the closest support is located in 18.59 minimum of August 16, 2024.
Mexican weight FAQS
The Mexican weight (MXN) is the most commercialized currency among its Latin American peers. Its value is widely determined by the performance of the Mexican economy, the country’s central bank policy, the amount of foreign investment in the country and even remittance levels sent by Mexicans living abroad, particularly in the United States. Geopolitical trends can also affect MXN: for example, the Nearshoring process (or the decision of some companies to relocate the manufacturing capacity and supply chains closer to their countries of origin) is also considered a catalyst for the Mexican currency, since the country is considered a key manufacturing center in the American continent. Another catalyst for MXN is oil prices, since Mexico is a key exporter of the raw material.
The main objective of the Central Bank of Mexico, also known as Banxico, is to maintain inflation at low and stable levels (in or close to its 3%target, the midpoint of a tolerance band between 2%and 4%). To do this, the bank establishes an adequate level of interest rates. When inflation is too high, Banxico will try to control it by raising interest rates, which makes the indebtedness of homes and companies more cooling, thus cooling the demand and the economy in general. The highest interest rates are generally positive for Mexican weight (MXN), since they lead to higher yields, which makes the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken the MXN.
The publication of macroeconomic data is key to evaluating the state of the economy and can have an impact on the valuation of the Mexican weight (MXN). A strong Mexican economy, based on high economic growth, low unemployment and high confidence is good for MXN. Not only attracts more foreign investment, but it can encourage the Bank of Mexico (Banxico) to increase interest rates, particularly if this fortress is accompanied by high inflation. However, if the economic data is weak, the MXN is likely to depreciate.
As an emerging market currency, the Mexican weight (MXN) tends to rise for periods of risk, or when investors perceive that the general market risks are low and, therefore, are eager to participate in investments that carry a higher risk. On the contrary, the MXN tends to weaken at times of market turbulence or economic uncertainty, since investors tend to sell higher risk assets and flee to the most stable safe shelters.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
