Quick overview
The Mexican peso depreciated against the U.S. dollar on Wednesday, breaking a seven-day winning streak, as markets reacted to weaker-than-expected U.S. labor data.
The exchange rate closed at 18.7681 pesos per dollar, compared to 18.7307 the previous day, according to official figures from Mexico’s central bank (Banxico). This represents a loss of 3.74 centavos, or 0.20%, for the local currency.
During the session, the dollar traded in a range between a high of 18.8154 and a low of 18.7167 pesos. Meanwhile, the U.S. Dollar Index (DXY)—which compares the greenback against a basket of six major currencies—rose 0.16% to 96.79 points.
USD/MXN
Focus Shifts to U.S. Data
Markets digested the latest ADP National Employment Report, which showed a loss of 33,000 private-sector jobs in June. This followed a downward revision for May to just 29,000 jobs created, well below analysts’ expectations of a 95,000-job gain.
Investors also remain focused on the approval process for President Donald Trump’s new fiscal and spending package, which cleared the Senate yesterday. Analysts estimate the plan could add $3.3 trillion to the U.S. national debt.
Attention now turns to Thursday’s release of the official nonfarm payroll report, a key data point for the Federal Reserve, which maintains a dual mandate of price stability and full employment. A second consecutive weak reading could strengthen expectations of interest rate cuts.
Losing Momentum After Strong Run
The peso’s recent rally had been supported by easing geopolitical tensions—namely, the end of a 12-day conflict between Iran and Israel—and early-week signs of progress in U.S.-Canada trade talks.
Over the course of its seven-session run, the peso gained 43.76 centavos, or 2.28%, hitting its strongest level since August 20. Despite the setback, technical analysts still view the overall trend as positive for the peso.
Investors should expect the recovery to continue. A break below 18.65 would reinforce bullish momentum. The next support level is around 18.55 pesos, while resistance stands at 18.85.
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
