USD/MXN: Peso spikes after strong Mexico unemployment rate data

The USD/MXN pair erased some of its earlier losses after relatively upbeat inflation and employment data from Mexico. It fell from a high of 19.98 to a low of 19.93.

Mexico unemployment rate falls

The Mexican peso gained slightly after the Mexican statistics agency published the latest inflation and unemployment rate data. 

The data revealed that the country’s unemployment rate dropped from 4.40% in February to 3.90% in March. This was a strong number than the median estimate of 4.20%. On a seasonally adjusted basis, the rate declined from 4.5% to 4.4%. These numbers are substantially better than those of most developed and emerging market countries. For example, in the United States, the rate is at 6%.

The USD/MXN also declined as the market reacted to the latest half-month consumer inflation data. The headline inflation rose by 0.06%, better than the expected decline of -0.10%. In the same period, the core CPI that excludes food and energy increased by 0.18%. In March, the headline and core CPI rose by 0.53% and 0.35%, respectively.

Economists expect that the Mexican economy will have a relatively quicker recovery. This is partly because the price of crude oil has continued to rise. This is important for Mexico because of the vast amount of oil that it produces. 

Most importantly, the Mexican economy will benefit from the overall US recovery. For example, the country is expected to receive billions of dollars more in remittances from the United States because of the recent stimulus package. Also, with the funds, more Americans will buy from Mexico, which is one of the country’s biggest partners.

USD/MXN technical forecast

The Mexican peso has risen substantially against the US dollar. It has risen by almost 8% in from the highest point in March. Further, the price has moved below the short and longer-term moving averages. It is between the middle and upper lines of the Bollinger Bands. Also, the pair has moved below the descending trendline. Therefore, the pair may resume the downward trend in hopes that the Bank of Mexico will hike interest rates in the near term. You can trade the USD/MXN using one of these popular high leverage forex brokers.