Mexican Peso holds steady after strong US PMI, jobs data

• Mexican Peso shows resilience, marginally dipping to 20.29 despite strong US services sector growth and job market data.
• Trump denies narrow tariff plans, boosting the US Dollar, yet the Peso maintains its ground against market fluctuations.
• Upcoming Mexican CPI data awaited as economic indicators from the US continue to shape Fed rate expectations.

The Mexican Peso posted minimal gains against the Greenback on Tuesday after data suggested that the United States (US) economy remained solid, while traders pared back the Federal Reserve's (Fed) first interest rate cut until July. At the time of writing, the USD/MXN trades at 20.27, down 0.16%.

The financial markets continued to reflect a positive market tone after The Washington Post published an article mentioning that US President-elect Trump's team is working toward narrowing tariffs that will “only cover critical imports.” Even though Trump refuted the article and boosted the buck, the Mexican Peso shrugged off those comments and appreciated against the US Dollar.

On the data front, the Institute for Supply Management (ISM) revealed that business activity in the Services sector improved sharply. At the same time, the survey showed that a sub-component of the Purchasing Managers Index (PMI) linked to prices hit its highest level since 2023.

At the same time, the US Bureau of Labor Statistics revealed that job vacancies broke above the 8 million threshold, indicating that the labor market is strengthening.

In Mexico, the economic docket remained absent on Tuesday and will resume on Thursday. The Consumer Price Index (CPI) will be revealed, and it is foreseen to continue its downward trajectory toward Banco de Mexico’s (Banxico) 3% target.

On Wednesday, the US economic schedule will feature the ADP Employment National Change, Initial Jobless Claims figures, and the Fed’s last meeting minutes.

Daily digest market movers: Mexican Peso consolidates ahead of Mexico’s CPI data

• The US Dollar Index (DXY) rises 0.17%, up at 108.46, a tailwind for the USD/MXN exotic pair.
• The ISM Services PMI in December increased by 54.1, exceeding forecasts of 53.3 and November’s 52.1 reading.
• The Job Labor & Turnover Survey (JOLTS) revealed that work openings increased from 7.839 million to 8.098 million in November.
• According to the Bureau of Economic Analysis, the US trade deficit widened in November, reaching $78.2 billion compared to $73.6 billion in October.
• Imports climbed by 3.4% to $351.6 billion from $339.9 billion, while exports increased by 2.7% to $273.4 billion from $266.3 billion.

USD/MXN technical outlook: Mexican Peso remains subdued near 20.30

The USD/MXN remains tilted in a vague direction, meandering around the 50-day Simple Moving Average (SMA) at 20.27. The Relative Strength Index (RSI), despite turning flat in bearish territory, indicates the exotic pair might consolidate, awaiting a fresh catalyst.

Therefore, if USD/MXN drops below the 50-day SMA, the next support would be the 20.00 figure. A breach of the latter will expose 100-day SMA at 19.91, followed by the 19.50 figure.

Conversely, if buyers stepped in and lifted the USD/MXN above 20.50, the next ceiling level would be the year-to-date (YTD) high of 20.90, ahead of 21.00 and the March 8, 2022 peak of 21.46.