Mexican Peso Poised for Significant Weekly Decline

The currency is on track to end the week with a sharp depreciation on a day marked by employment data from the United States and inflation figures from Mexico.

The Mexican peso is trading with losses on this final day of the week. It is set to close the week with a significant depreciation, influenced by U.S. employment data that affect hopes for interest rate cuts.

The spot exchange rate stands at 18.0837 pesos per dollar. Against yesterday’s official close of 17.8881 pesos, based on Banco de México (Banxico) data, this movement represents a loss of 19.56 cents, equivalent to 1.09 percent.

The dollar price is fluctuating within a range between a high of 18.1500 pesos and a low of 17.8051 pesos. The U.S. Dollar Index (DXY) from the Intercontinental Exchange, which measures the dollar against six currencies, is up 0.62% at 104.75 units.

This morning, the U.S. released its non-farm payroll report. The report showed that job growth in the United States accelerated much more than expected in May, contrary to what is needed to reduce rates soon.

On the local front, this morning, the Inegi reported that inflation in Mexico was at 4.69% annually in May, marking three consecutive months of increases, while the core index decreased for the sixteenth consecutive month to 4.21%.

At its current level, the peso has accumulated a loss of 1 peso and 11 cents or 6.57 percent since last Friday’s close of 16.9682 pesos. Despite significant figures, this decline is more closely related to the outcome of local elections.

On Monday, Mexican markets recorded their worst one-day losses since the pandemic after learning that Morena and its allies achieved a landslide victory, both in the presidential race and in the election of legislators.

Nervousness intensified over the possibility that Morena might use this majority to push for constitutional changes, and although the market had shown less volatility in recent days, it returned due to an announcement from the party.