Table of Contents
- 1 Mexican peso weakens against dollar
- 2 Mexican peso strengthens against euro, flat against pound
- 3 Scheinbaum believes INAI reform is necessary
- 4 Technical Analysis: USD/MXN extends wave “C” higher
- 5 **How might the current slowdown in global growth, coupled with potential interest rate hikes in the United States, impact the attractiveness of Mexican assets to foreign investors and consequently, the value of the Peso?**
- The Mexican peso consolidated ahead of important Mexican economic data.
- The Mexican peso faces headwinds from slowing growth, dovish central banks and U.S. politics.
- From a technical perspective, USD/MXN is embarking on an upward move that is part of a larger measured move pattern.
As the week comes to a close, the Mexican peso (MXN) is trading modestly mixed among the most traded currency pairs, with the U.S. dollar (USD), euro (EUR) and British pound (GBP) each suffering from idiosyncratic factors. same. That could change later on Friday when Mexico releases third-quarter gross domestic product data and mid-month inflation data for November.
The peso overall faces headwinds. These include recent weak retail sales data – although September sales rose 0.1% month-on-month – and comments from Mexico’s central bank president Victoria Rodríguez Ceja, who said she expected a More interest rate cuts (thereby reducing foreign capital inflows). Additionally, U.S. President-elect Donald Trump’s policies have also weighed on the peso, particularly the threat of tariffs and the possibility of mass returns of Mexican migrants, whose remittances fuel recurring demand for the Mexican peso. .
Mexican peso weakens against dollar
The Mexican peso has depreciated overall against the U.S. dollar (USD) this week as rising U.S. inflation expectations, expectations that the Trump administration will implement aggressive U.S. dollar policies in January, and a strengthening U.S. labor market all combine to support the greenback.
Economists believe these factors combined will result in a shallower downward trajectory for U.S. interest rates, which in turn could keep the dollar supported as higher rates attract greater foreign capital inflows.
According to the CME FedWatch tool, the market’s probability of the Fed cutting interest rates by 25 basis points (0.25%) at the December meeting is estimated at 56%, and the probability of the Fed keeping interest rates unchanged is 44%. That’s slightly lower than Thursday’s odds. This likely reflected stronger initial jobless claims data released that day, which showed 213,000 Americans filed for unemployment benefits in the week ended November 15, below expectations of 220,000.
The dollar also strengthened on safe-haven demand as geopolitical tensions between Russia and NATO increased following news that Russia might use long-range ballistic missiles to bomb the Ukrainian city of Dnipro. The move may be a retaliation for Ukraine’s use of British Storm Shadow missiles to attack targets in Russia, after the United States gave Kiev the green light to deploy its own ATACMS missiles in Russia.
Mexican peso strengthens against euro, flat against pound
The Mexican peso appreciated broadly against the euro (EUR), but fell against the euro (EUR) after several European Central Bank (ECB) policymakers said Europe needed to cut interest rates faster to combat stalling economic growth.
Germany, Europe’s economic engine, has been showing warning signs both economically and politically for some time. Its latest third-quarter GDP growth data fell short of expectations, showing that the euro zone’s largest economy grew by only 0.1%, lower than previously. expectations.
The Mexican peso against British Pound Sterling (GBP) has been range-bound since August on expectations that UK interest rates will remain relatively stable – at a high 4.75% compared to most other major economies. Supported the pound.
This comes as UK economic growth prospects improve. However, GBP/MXN fell today following the release of weak UK retail sales data, which was generally below expectations and previous readings.
Scheinbaum believes INAI reform is necessary
The Mexican peso has been troubled by the controversial reform agenda of the new government of Morena, led by President Claudia Scheinbaum. In fact, this was one of the reasons cited by Moody’s Ratings for its recent downgrade of Mexico’s credit rating from Baa2 “stable” to “negative.” On Wednesday, Mexico’s Congress passed more controversial reforms, this time to abolish or replace Mexico’s five independent regulatory agencies, Financier reported.
According to Human Rights Watch, the agency “has the power to require government agencies, political parties, unions, or other public bodies to comply with freedom of information requests from individuals or organizations.” The INAI also gives Mexican citizens the right to safeguard their personal data.
Asked about the controversial move at a press conference on Thursday, Claudia Sheinbaum said: “Those who try to defend INAI forget about corruption.
“The president went on to cite examples of corruption and cronyism within the National Institute of Aeronautics and Astronautics revealed by the Federal Audit Service (ASF),” Mexico News Daily reported.
Sheinbaum said top managers at the National Institute of Aeronautics and Astronautics demanded bribes ranging from 10% to 60% of candidates’ salaries to get them jobs at the agency, and that nepotism was rife at the National Institute of Aeronautics and Astronautics.
The President said the responsibilities of INAI will be taken over by the Ministry of Anti-Corruption and Good Governance.
“There will be greater transparency…[并]Put an end to corruption. …Personal data will be protected,” Sheinbaum added.
Technical Analysis: USD/MXN extends wave “C” higher
USD/MXN appears to be embarking on a “C” wave rise after completing a “measurement move” pattern (see chart below). These patterns consist of three waves, where the first and third waves are of similar length.
USD/MXN 4-hour chart
USD/MXN fluctuates between the 19.70 area and the 20.80 area, and looks range-bound in the short term. The extension of wave C corresponds to an upward move toward its upper limit (green dashed line) within a sideways consolidation.
On Wednesday, the Moving Average Divergence (MACD) indicator (blue) crossed its red signal line and is now also above the zero line, adding support for the pair to potentially develop a higher support line.
A breakout above the November 21 high of 20.40 would confirm that wave C extends to at least the same level as the top of wave A at 20.69, and possibly even to 20.80 and the upper limit of the range.
**How might the current slowdown in global growth, coupled with potential interest rate hikes in the United States, impact the attractiveness of Mexican assets to foreign investors and consequently, the value of the Peso?**
## Interview: The Future of the Mexican Peso
**Introduction:**
Welcome to World Today News! Today we’re discussing the recent fluctuations in the Mexican Peso and what the future holds for this important currency. We are joined by two distinguished guests: Dr. Maria Sanchez, a leading economist specializing in Latin American markets, and Miguel Rodriguez, a seasoned currency trader with extensive experience in emerging market currencies. Welcome both of you!
**Section 1: Economic Headwinds and Domestic Policy**
* **Host:** Dr. Sanchez, the article highlights several headwinds facing the Mexican Peso, including slowing growth and dovish central bank policies. Could you elaborate on these challenges and their potential impact on the Peso’s value?
* **Host:** Miguel, from a trader’s perspective, how are you interpreting these economic signals? Do you see the Peso’s recent weakness as a temporary blip or a sign of more sustained depreciation?
* **Dr. Sanchez:** I believe…
* **Miguel:** From my analysis…
**Section 2: The Role of US Politics and Global Uncertainty**
* **Host:** The article mentions the potential impact of US President-elect Trump’s policies on the Mexican Peso. Could you both discuss the potential ramifications of these policies, particularly concerning tariffs and the flow of remittances?
* **Host:** Beyond US politics, global events like the tensions between Russia and NATO are also mentioned. How do these geopolitical uncertainties factor into the Peso’s performance?
* **Dr. Sanchez:** While the exact impact of…
* **Miguel:** It’s crucial to remember that…
**Section 3: Technical Analysis and Market Outlook**
* **Host:** The article also dives into the technical aspects of the USD/MXN exchange rate. Miguel, could you explain the ”measured move” pattern mentioned and what it might indicate about the Peso’s immediate future?
* **Host:** Dr. Sanchez, how do you reconcile this technical analysis with the broader economic fundamentals we discussed earlier? Where do you see the Peso settling in the coming months?
* **Miguel:** The chart suggests…
* **Dr. Sanchez:** I believe the interplay between…
**Section 4: The Impact of INAI Reforms and Investor Confidence**
* **Host:** The article mentions the controversial reforms targeting the National Institute for Access to Information (INAI). Dr. Sanchez, could you elaborate on the potential impact of these reforms on investor confidence in Mexico and the Peso?
* **Host:** Miguel, are you seeing any evidence of these political developments factoring into traders’ decisions on the Peso?
* **Dr. Sanchez:** The INAI plays a vital role in…
* **Miguel:** In the market, we are observing…
**Conclusion**
* **Host:** Thank you both for your invaluable insights. The future of the Mexican Peso remains uncertain, but your perspectives have shed light on the key factors at play. As the global economy continues to evolve, it will be fascinating to see how these dynamics unfold.
