Strong boost to Mexican peso! Dollar falls below 17.00 after US employment data by Investing.com

Investing.com – The US has turned a corner and is set for gains against the dollar, with the exchange rate falling below 16.90 units for the first time this year, after the release of strong labor market data in the United States, defying expectations. Is back on track. Cooling achieved by the restrictive monetary policy of the Federal Reserve (Fed).

Around 10:00 a.m. Mexico City time, the exchange rate from the dollar to the Mexican peso fell to 16.88 units. Thus, according to real-time data from Investing.com, the national currency witnessed a remarkable intraday appreciation of 0.74%, the most significant since mid-December.

With this, the Mexican peso reversed the losses recorded at the beginning of the session, when the US dollar was trading above 17.00, in an environment where financial markets had reduced expectations that the Fed could make the first rate cut. . Interest rates in early March.

Source: Investing.com

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Why does the Mexican peso benefit from US employment data?

It was announced this morning that, in December, the US economy generated 216,000 non-farm payrolls, a higher figure than the previous month and far above the 170,000 expected by economists consulted by Investing.com , which is growing faster than all subsequent forecasts. Up from 173,000 seen in November (revised from 199,000 previously reported).

Regarding private non-farm payrolls, 164,000 were created in December, more than expected, while the unemployment rate remained at 3.7%, contrary to expectations that it would increase by one-tenth.

“The peso appreciated due to the publication of the December employment report in the United States, which was better than expected. The above is positive news for Mexico’s economic growth, due to the close economic ties between the two countries through exports,” said Gabriela Siller Pagaza, director of economic and financial analysis at Grupo Financiero Base.

This data has also generated volatility, which tracks the development of this currency in a basket of six other major currencies. The dollar breached the 103-point mark, its highest level since mid-December, after reports of strength in job creation.

“The solid employment report prompted operators to revise down their predictions of an early and significant interest rate cut by the Federal Reserve during 2024,” said Janeth Queiroz Zamora, director of economic, exchange and stock market analysis at Grupo Monex Financial. “

However, at the time of writing this report, the dollar was falling 0.31% and was below the level of 102.10 units seen early in the session.

Jorge Gordillo Arias, director of economic and stock market analysis, said, “As the various employment data released during the week had already shown, the labor market remains strong and is showing signs of weakening, with wages rising. “Additional inflationary pressures may arise.” In Sibanco.

Thanks to the momentum recorded this morning, the Mexican peso has returned to the levels recorded in the last session of December and plans to close the first week of 2024 with an appreciation of about 0.4%.