The Mexican Peso slipped from multi-year lows on Thursday, reacting to optimistic US growth figures and labor market resilience. The USD/MXN pair edged higher as buyers capitalized on the Peso’s dip towards an over eight-year low of 16.51. At the time of writing, the pair was trading at 16.62, up 0.50%.
The boost in the US Dollar came after strong GDP growth in the fourth quarter of 2023 and a robust labor market, with fewer Americans applying for unemployment benefits. Federal Reserve Governor Christopher Waller’s hawkish comments also contributed to the strength of the US Dollar, as he emphasized the need for rates to be higher for longer.
On the Mexican side, Banxico Governor Victoria Rodriguez Ceja remained dovish in an interview, stating that the battle against inflation is ongoing. However, Banxico revealed that international reserves grew to $216.9 billion, adding $411 million in US Dollars through March 22.
Mexico’s Balance of Trade in February showed a deficit of $-0.5 billion, while the Unemployment Rate dropped to 2.5%. The Indicator of General Economic Activity in Mexico indicated signs of contraction in January, leading to a rate cut by Banxico on March 21.
Technical analysis of the USD/MXN pair showed that the Peso was on the backfoot as it edged towards the 16.60 region. Strong resistance was seen at 16.62, with potential support at 16.51 and 16.32.
Overall, the Mexican Peso’s movement was influenced by a combination of factors, including US economic data, Fed comments, and Mexican economic indicators. The currency remains sensitive to market sentiment and geopolitical trends, making it important to monitor key economic data releases and central bank policies to assess its future performance.
