• Mexican Peso registers losses against the US Dollar, trading above 18.00 during the North American session.
• Mexico’s Consumer Confidence holds steady, but subcomponents signal pessimism regarding domestic and US economic conditions.
• USD/MXN advances steadily after US unemployment claims were slightly up but failed to undermine the US Dollar.

Mexican Peso (MXN) registered moderated losses against the US Dollar (USD) in early trading during the North American session. A slew of data from Mexico and the United States (US) seems to have taken a toll on the Peso, lifting USD/MXN past the 18.00 figure.

The economic calendar in Mexico showed that Consumer Confidence was unchanged compared to August’s data. However, two of the five subcomponents showed a slight deterioration due to fears of a slowdown in the US. Households turned pessimistic about their economic outlook one year from now, and simultaneously, they expect the future economic conditions in Mexico tol worsen.

Before Mexico’s data, the US docket delivered unemployment claims, which came slightly above the prior week but below forecasts. At the same time, the US Balance of Trade deficit narrowed, compared to July’s data, while Exports rose and Imports diminished.

Daily Digest Market Movers: Mexican Peso tanks in early trading, with USD/MXN buyers eyeing 18.20

• Consumer Confidence in Mexico came at 46.7 in September, unchanged from August.
• US Initial Jobless Claims for the week ending on September 30 advanced to 207,000, above the previous week’s 205,000, but trailed forecasts of 210,000.
• The US Balance of Trade showed a narrower deficit of $58.3 billion, below the $62.3 billion of the consensus and July’s $64.7 billion.
• US Exports rose by $256 billion, exceeding the previous reading of $251.9 billion.
• US Imports decreased to $314.3 billion from $316.6 in July.
• On Wednesday, the IMF raised Mexico’s growth projection in 2023 from 2.6% to 3.2% and from 1.5% foreseen in July to 2.1% for 2024.
• US ADP Employment figures came at 89,000, below forecasts of 153,000 ahead of the official government Nonfarm Payrolls report on Friday.
• US ISM Services PMI came at 53.6, as foreseen by analysts, though moderately slowed down.
• Banxico’s September poll amongst economists reported that interest rates are expected to remain at 11.25% while inflation would dip to 4.66%.
• The same poll shows the exchange rate is set to finish at around 17.64, down from 17.75.
• Mexico’s S&P Global Manufacturing PMI for September came at 49.8, sliding to contractionary territory and below August’s 51.2, as the economy loses steam.
• The Bank of Mexico (Banxico) held rates at 11.25% in September and revised its inflation projections from 3.5% to 3.87% for 2024, above the central bank’s 3% target (plus or minus 1%).
• Banxico’s Government Board highlighted Mexico’s economic resilience and the strong labor market as the main drivers to keep inflation at the current interest rate level.
• Mexico’s Unemployment Rate edged lower from 3.1% in July to 3.0% in August, according to the National Statistics Agency (INEGI).

Technical Analysis: Mexican peso is vulnerable to further losses

The daily chart shows that the Mexican Peso is set to extend its losses on Thursday. With the USD/MXN exchange rate hovering near the weekly high of 18.20, a decisive break above 18.21 could put into play the next resistance seen at the April 5 high at around 18.40, as the pair continues its uptrend towards the April 2018 yearly low of 18.60. With those levels cleared, the next stop would be the March 24 high at 18.79, followed by the psychological 19.00 figure