The Mexican Peso (MXN) depreciated by approximately 0.91% against the US Dollar (USD) on Thursday, with the USD/MXN pair trading at 18.14 after reaching a low of 17.95 earlier in the session [1]. This decline was driven by robust US economic data, including lower-than-expected Initial Jobless Claims, which signaled ongoing strength in the US labor market [1]. Additionally, hawkish remarks from St. Louis Fed President Alberto Musalem, who stated that inflation remains above 2% and further tightening is needed, contributed to the Peso's weakness [1].
The market mood shifted negatively after the Financial Times reported that OpenAI's annual revenue is $20 billion lower than previously signaled, which weighed on US tech stocks and sent equities lower, further pressuring emerging market currencies like the Peso [1]. Despite the US Dollar Index (DXY) underperforming against most G7 currencies and being down 0.07% at 102.17, the Peso was an exception, falling against the Greenback [1].
On the domestic front, Mexico's headline inflation rose from 3.26% to 3.45% year-over-year in September, slightly below estimates of 3.47%. Core inflation for the same period decreased from 3.88% to 3.75%, also below forecasts of 3.8% [1]. The Bank of Mexico (Banxico) minutes indicated that the inflation outlook remains skewed to the upside, and there is uncertainty about whether Banxico might raise rates if inflation surpasses the 4% threshold in the future [1].
From a technical perspective, USD/MXN is trading at 18.1986, extending its recovery above clustered simple moving averages around 17.2852, with the Relative Strength Index at 72.18 indicating overbought conditions. Initial support is seen at the triple SMA area near 17.29 [1].
Looking ahead, traders are expected to focus on the upcoming University of Michigan Consumer Sentiment print, as there are no significant Mexican economic releases scheduled [1].
CONCLUSION
The Mexican Peso's decline was primarily driven by strong US economic data and hawkish Fed commentary, despite Mexico's inflation remaining below expectations. Market sentiment remains cautious, with technical indicators suggesting the USD/MXN pair is overbought but not yet reversing. Investors will be watching US consumer sentiment data for further direction.