Mexican Peso steadies against US Dollar amid mixed data, Fed commentary

• Mexican Peso is slightly up versus the US Dollar on cautious trading as Consumer Confidence deteriorates.
• Decrease in Mexico's Consumer Confidence and Manufacturing PMI slowdown highlight challenges amid Banxico's rate adjustments.
• Remittances remain a key support for the Peso, overshadowing near-shoring gains amid broader economic considerations.

The Mexican Peso prints minuscule gains against the US Dollar on Thursday after the release of economic data from Mexico and the United States (US). That and recent Federal Reserve officials crossing the newswires keep the American currency pressured amid rate cut speculation. At the time of writing, the USD/MXN trades at 16.54, down 0.01%.

Mexico’s economic docket witnessed a drop in March’s Consumer Confidence, according to the National Statistics Agency (INEGI). Data shows the economy is still growing but began to lose some momentum as March’s Manufacturing PMI decelerated amid higher interest rates set by the Bank of Mexico (Banxico).

Meanwhile, Mexico’s remittances continued to be the main driver of the Peso’s strength. There’s speculation about near-shoring, but according to an article by EL CEO, in 2023 Foreign Direct Investment (FDI) stood at $36.058 billion, while remittances amounted to $63.345 billion. Sources cited by EL CEO stated, “We must not fail to point out that this is a gap in Mexico's productive capacity and a lack of opportunities. We are getting the kind of external savings.”

The US economy witnessed a cooler labor market as more Americans applied for unemployment benefits. The Balance of Trader revealed that the deficit widened compared to January’s data.

Daily digest market movers: Mexican Peso strength unlinked to Foreign Direct Investment

• Mexico’s Consumer Confidence stood at 47.3 in March, below February’s 47.4.
• A Reuters poll published on April 4 reveals that most economists foresee the USD/MXN appreciating 4.7% to 17.38 in twelve months, down from 18.24 projected in the March poll.
• Ahead on Thursday, Banxico releases the latest meeting minutes.
• According to Dafne Viramontes, the president of the Aguascalientes College of Economists, from 2013 to 2017, FDI amounted to $180 billion, while in the first five years of Andres Manuel Lopez Obrador's presidency, it sank to $167 billion.
• US Initial Jobless Claims for the week ending March 30 rose by 221K, exceeding the consensus of 214K and last week’s 212K.
• The US Balance of Trade reported a $-68.9B deficit, more than the $-67.3B estimate and January’s $-67.6B.
• Philadelphia Fed President Patrick Harker commented that inflation is too high for rate cuts at present.

Technical analysis: Mexican Peso remains firm with buyers eyeing 16.32, October’s 2015 low

The USD/MXN remains bearish with sellers eyeing a retest of the year-to-date (YTD) low of 16.51. It appears the pair is consolidating near 16.50, unable to break below that level decisively, which could pave the way to test the October 2015 low of 16.32. Further downside is seen at the 16.00 figure.

On the flip side, If USD/MXN bulls stepped in, they must reclaim 16.70. Once cleared, the next resistance would be the 50-day Simple Moving Average (SMA) at 16.91, with further upside seen at the 100-day SMA at 17.02, ahead of the 200-day SMA at 17.18.