Peso Surges Against the Dollar in Anticipation of FOMC Meeting

• Mexican Peso is on the offensive, climbing from weekly lows and reclaiming the 100-day SMA.
• Mexico’s Producer Price Index was softer than estimated, keeping Banxico’s hopes of easing policy next year alive.
• US Nonfarm Payrolls in November were better than foreseen, in contrast to previously released jobs data.

The Mexican Peso (MXN) is gaining ground against the US Dollar (USD) during the North American session on Friday. Data from the United States (US) showed that the labor market is stronger than previously thought, leading to a change in trader expectations for rate cuts by the US Federal Reserve (Fed) next year. The USD/MXN is currently trading at 17.35, losing 0.55% on the day, and finishing the week with gains of 1.20%.

Producer inflation in Mexico slowed down in November, reinforcing the expectation that the Bank of Mexico (Banxico) may ease monetary policy in the future. Meanwhile, in the US, the labor market remains strong, with more jobs added than expected. Traders are now focusing on the Federal Reserve’s upcoming meeting and the release of US inflation data.

• Mexico’s Producer Price Index (PPI) rose by 1.20% YoY in November, while the latest consumer inflation report in Mexico missed forecasts and exceeded October’s reading.
• US Nonfarm Payrolls exceeded forecasts of 180K and rose by 199K in November, while the Unemployment Rate slid to 3.7% from 3.9%.

The USD/MXN is sliding below the 100-day Simple Moving Average (SMA), indicating that Mexican Peso buyers have regained control. Read more about this market development here.