Mexican Peso Gains Ground Amid Strong U.S. Employment Data

The Mexican peso showed signs of recovery against the dollar on Friday morning. This increase followed the release of the U.S. non-farm payroll report, which exceeded expectations but did not alter forecasts for Federal Reserve interest rates.

The current exchange rate stands at 20.1910 pesos per dollar, marking a slight improvement of 1.33 cents, or 0.07%, compared to yesterday’s official closing rate of 20.2043 pesos, according to data from Banco de México (Banxico).

Throughout the trading session, the dollar fluctuated between a high of 20.2422 pesos and a low of 20.1016 pesos. The U.S. Dollar Index (DXY), which measures the dollar against a basket of six major currencies, increased by 0.02% to reach 105.73.

In November, non-farm payrolls rose by 227,000 jobs, following a revised increase of 36,000 in October, as reported by the U.S. Department of Labor.

However, this data did not indicate significant changes in the labor market. Following the payroll report, U.S. Treasury yields declined, leading to a slight pullback in the dollar’s strength.

Investors interpreted these figures as insufficient grounds for the Federal Reserve to pause its interest rate cuts. This sentiment is significant ahead of the upcoming meeting scheduled for December 17-18.

CME’s FedWatch tool, which tracks federal funds futures, indicates that traders now assign a 90% probability to a 25 basis point rate cut in December. This marks a notable increase from the previous expectation of 74%.

According to local firm Banco Base, “The appreciation of the peso is attributed to the November employment report in the United States.”

This report supports expectations that the Fed will lower its benchmark rate. They noted that market participants will closely monitor comments from Federal Reserve officials today.

The Mexican stock market experienced a downturn after four consecutive days of gains.

After climbing nearly 4% from its annual low over the past four sessions, Mexican stock indices fell in today’s trading session. The S&P/BMV IPC index, which tracks Mexico’s most actively traded stocks, decreased by 0.49%, settling at 51,501.18 points.

Meanwhile, the FTSE BIVA index dropped by 0.26% to reach 1,048.77 points. Within the benchmark index, most stocks recorded losses.

Significant declines were seen in shares of Alfa, which fell by 2.54% to 15.76 pesos; Grupo México, which lost 1.24% to reach 103.23 pesos; and Coca-Cola Femsa, down by 1.11% to 166.37 pesos.

This market movement reflects broader economic conditions and investor sentiment. It arises amid ongoing discussions about monetary policy and its implications for growth and stability in Mexico and beyond.