- USD/MXN is trading sideways between 17.65 and 17.70 despite the fact that the USD index remains extremely volatile.
- The approval of the debt ceiling law in Congress has shot up US Treasury yields.
- US ISM data will report a seventh consecutive contraction in the manufacturing PMI.
The USD/MXN shows a sideways price since the beginning of the day, operating between a daily maximum of 17.70 and a minimum of 17.65 tested at the beginning of the European session. At time of writing, the pair is trading above 17.66, losing 0.10% on the day.
The asset is trading lackluster despite high volatility in the US Dollar Index (DXY). The USD index has extended its rally move above the crucial resistance at 104.30 as one more interest rate hike from the Federal Reserve (Fed) is widely anticipated at its June policy meeting.
S&P 500 futures continue to gain from the Asian session as the US debt ceiling bill has been given the go-ahead by Congress and fears of a US default have been completely allayed. This has triggered US Treasury yields, which at 10 years have exceeded 3.67%.
USD/MXN could turn volatile later in the day as the US Automatic Data Processing (ADP) Research Institute will report private employment change data for May. According to consensus, the US economy added 170,000 jobs in May, up from 296,000 in April. A slowdown in the hiring process could ease labor market conditions somewhat, however the fact that overall employment conditions are healthy cannot be ruled out. This will keep hopes of further tightening from the Federal Reserve (Fed) very strong.
In addition to the US Employment data, the ISM Manufacturing PMI will also be in focus. According to estimates, the US ISM will report a seventh consecutive contraction of the manufacturing PMI. The economic data would sit at 47.0 and a number below 50.0 is in itself considered a contraction.
As for the Mexican Peso, investors will continue to watch the unemployment rate, which will be released on Friday. Mexico’s unemployment rate (April) could rise to 2.7%, according to forecasts, compared to 2.4% previously published, which could be a consequence of the increase in interest rates by the Bank of Mexico (Banxico). Investors should note that Banxico has raised interest rates to 11.25% in its fight against persistent inflation.
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.
