- The Mexican Peso has slipped as broader markets focus on US data.
- Notable lack of Mexico data on the docket for this week.
- Markets are set to hinge on US labor, output figures ahead of NFP Friday.
The Mexican Peso (MXN) is taking a breather, retreating from a 17-week high against the US Dollar (USD) as markets kick off the new trading year focusing on US labor and output data.
Economic data from Mexico is absent from the calendar for this week, and the USD is set to be the primary driver to usher in 2024. The Greenback is rebounding in early trading as money markets ease back on bets of Federal Reserve (Fed) rate cuts, with the US Dollar reclaiming around a full percent against the Peso.
Daily digest market movers: Mexican Peso gives back recent gains as investors look to US NFP
- The US Dollar is climbing across the board to kick off the new year’s inaugural trading week.
- Money markets have eased back their bets of Fed rate cuts, still see up to 150 basis points in rate cuts through 2024.
- US output continues to fall, S&P Global Manufacturing Purchasing Managers’ Index (PMI) for December declined to 47.9, a four-month low. Median market forecast expected a steady print at November’s 48.2.
- US Construction Spending also missed the mark, slipping from October’s 1.2% (revised up from 0.6%) to print at 0.4% in November, missing the forecast of 0.5%.
- Wednesday brings the US ISM Manufacturing PMI, as well as the latest round of the Fed’s Meeting Minutes.
- Thursday sees the December print of the ADP Employment Change, but the figure has become notoriously inconsistent lately, poorly forecasting the release of Friday’s US Nonfarm Payrolls, alongside US Average Earnings and the ISM Services PMI.
US Dollar price this week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.99% | 0.90% | 0.49% | 0.71% | 0.64% | 0.99% | 0.93% | |
| EUR | -0.84% | 0.08% | -0.35% | -0.12% | -0.36% | 0.16% | 0.04% | |
| GBP | -0.92% | -0.08% | -0.41% | -0.20% | -0.20% | 0.08% | -0.05% | |
| CAD | -0.49% | 0.32% | 0.59% | 0.21% | 0.13% | 0.49% | 0.39% | |
| AUD | -0.70% | 0.11% | 0.22% | -0.22% | -0.25% | 0.29% | 0.19% | |
| JPY | -0.63% | 0.37% | 0.33% | 0.05% | 0.26% | 0.52% | 0.19% | |
| NZD | -1.00% | -0.14% | -0.08% | -0.49% | -0.28% | -0.54% | -0.11% | |
| CHF | -0.87% | -0.02% | 0.06% | -0.35% | -0.15% | -0.24% | 0.13% |
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 fades top side, eases back as US Dollar rebounds
The Mexican Peso (MXN) is slipping back from near-term highs, getting pushed back down as market pivot into Greenback bets. The USD/MXN has rebounded above the 200-hour Simple Moving Average (SMA), climbing back over the 17.00 level following last week’s decline to a multi-month low of 16.86.
Bullish momentum in the US Dollar still faces a long climb upwards, with long-term technical resistance sitting at the bearish crossover of the 50-day and 200-day SMAs just south of 17.50. On the low side, a break below 2023’s lows of 16.62 will see the USD/MXN breaking into its lowest bids since 2016.
USD/MXN Hourly Chart
USD/MXN Daily Chart
Dot Plot FAQs
The “Dot Plot” is the popular name of the interest-rate projections by the Federal Open Market Committee (FOMC) of the US Federal Reserve (Fed), which implements monetary policy. These are published in the Summary of Economic Projections, a report in which FOMC members also release their individual projections on economic growth, the unemployment rate and inflation for the current year and the next few ones. The document consists of a chart plotting interest-rate projections, with each FOMC member’s forecast represented by a dot. The Fed also adds a table summarizing the range of forecasts and the median for each indicator. This makes it easier for market participants to see how policymakers expect the US economy to perform in the near, medium and long term.
The US Federal Reserve publishes the “Dot Plot” once every other meeting, or in four of the eight yearly scheduled meetings. The Summary of Economic Projections report is published along with the monetary policy decision.
The “Dot Plot” gives a comprehensive insight into the expectations from Federal Reserve (Fed) policymakers. As projections reflect each official’s projection for interest rates at the end of each year, it is considered a key forward-looking indicator. By looking at the “Dot Plot” and comparing the data to current interest-rate levels, market participants can see where policymakers expect rates to head to and the overall direction of monetary policy. As projections are released quarterly, the “Dot Plot” is widely used as a guide to figure out the terminal rate and the possible timing of a policy pivot.
The most market-moving data in the “Dot Plot” is the projection of the federal funds rate. Any change compared with previous projections is likely to influence the US Dollar (USD) valuation. Generally, if the “Dot Plot” shows that policymakers expect higher interest rates in the near term, this tends to be bullish for USD. Likewise, if projections point to lower rates ahead, the USD is likely to weaken.
Source: https://www.fxstreet.com/news/mexican-peso-falls-back-to-kick-off-the-new-trading-year-202401021653