Mexican Peso continues to press into familiar highs as risk appetite rebounds – Crypto News – Crypto News
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Mexican Peso resilience might not last long due to domestic and external risks – MUFG Mexican Peso resilience might not last long due to domestic and external risks – MUFG

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Mexican Peso continues to press into familiar highs as risk appetite rebounds – Crypto News

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  • Mexican Peso propped up by recovering market sentiment.
  • Mexico Trade Balance due Friday to be overshadowed by US PCE Price Index inflation.
  • Surprise drop in US inflation indicators pins risk appetite despite overall mixed bag.

The Mexican Peso (MXN) is on the rebound for Thursday, gaining ground against the US Dollar (USD) as broader markets sell off the Greenback despite mixed results from the day’s slew of US data points.

Economic data from Mexico was limited on Thursday, and November’s Mexico Trade Balance figures due on Friday are set to continue being eclipsed by one last print of the US Personal Consumption Expenditures (PCE) Price Index.

Wednesday’s late decline in the Mexican Peso, sparked by a broad-market pullback in equities and other risk assets, has evaporated on Thursday as pre-holiday market churn produces plenty of froth and market moves become harder to explain.

Daily digest market movers: Mexican Peso rebounds to familiar highs in a risk-bid resurgence

  • Mexican Peso climbs back into familiar highs against the US Dollar as stock markets rally.
  • Broad-market risk appetite rebound sees the MXN up around half a percent against the USD.
  • Mexico inflation for the first half-month of December came in above expectations but still declined from the previous period’s 0.63%, printing at 0.52% for the first two weeks of the month versus the forecast decline to 0.4%.
  • The Greenback is the single worst-performing currency of the majors on Thursday.
  • Easing inflation and growth figures from the US are ramping up market bets of even further rate cuts in 2024.
  • US Initial Jobless Claims rose to 205K from 203K (revised upwards slightly from 202K), undercutting the market forecast of 215K.
  • Money market rate cut expectations have run far ahead of the Fed’s dot plot; investors see 160 basis points in rate cuts for 2024 versus the Fed’s own expectations of 75 bps.
  • US Core PCE inflation settled at 2.0% in the third quarter, below the median market forecast of a hold at 2.3%.
  • US Annualized Gross Domestic Product (GDP) also undercut forecasts, printing at 4.9% compared to the expected print of 5.2%.
  • Mexico November Trade Balance (in USD terms) is expected to rebound from -252 million to 404 million.
  • November’s YoY US Core PCE Price Index inflation, forecast to decline from 3.5% to 3.3%, will be the headliner on Friday and set overall market direction heading into the holiday break.

US Dollar price today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Japanese Yen.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.38% -0.07% -0.42% -0.70% -0.91% -0.53% -0.65%
EUR 0.38%   0.30% -0.07% -0.36% -0.53% -0.16% -0.30%
GBP 0.07% -0.32%   -0.34% -0.63% -0.84% -0.46% -0.59%
CAD 0.42% 0.02% 0.35%   -0.28% -0.48% -0.11% -0.24%
AUD 0.73% 0.33% 0.66% 0.30%   -0.16% 0.20% 0.06%
JPY 0.91% 0.50% 0.83% 0.47% 0.17%   0.38% 0.23%
NZD 0.52% 0.17% 0.47% 0.11% -0.19% -0.36%   -0.15%
CHF 0.65% 0.29% 0.60% 0.22% -0.07% -0.25% 0.12%  

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).

Technical analysis: Mexican Peso recovers to near-term upper bound

The Mexican Peso (MXN) is pushing back into recent highs against the US Dollar, driving the USD/MXN pair back into the 17.05 neighborhood after etching in a fresh 12-week low of 17.02.

Despite the USD/MXN’s recent downside, meaningful momentum remains limited for the Mexican Peso, and chart activity is set to continue squeezing into consolidation as the 50-day and 200-day Simple Moving Averages (SMA) congest just above the 17.50 level.

It will take a decisive break of support at 16.75 to chalk in a new low for the year and kick off a new uptrend in the Peso for 2024, while any USD/MXN bullish reversals are going to see stiff resistance as a pattern of lower highs sees confluence between the major moving averages and the last swing high.

USD/MXN Hourly Chart

USD/MXN Daily Chart

Interest rates FAQs

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%.
If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank.
If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure.
Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.

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