Mexican Peso Extends Losing Streak as Strong U.S. Jobs Data Lifts the Dollar
The U.S. dollar index (DXY), which tracks the greenback against a basket of major currencies, slipped 0.03% to 100.20 points.
Quick overview
- The Mexican peso weakened for the third consecutive session, closing at 18.3892 pesos per dollar after stronger U.S. employment data bolstered the dollar.
- Expectations for a Federal Reserve rate cut in December have decreased, with traders now seeing only a 34% chance of a cut.
- NVIDIA's stock initially rose after strong earnings but ultimately fell 3.09%, contributing to a broader decline in semiconductor stocks.
- Investor concerns over high valuations and growth expectations in AI-related equities led to profit-taking in the tech sector.
The Mexican peso weakened on Thursday after reversing early gains, marking its third consecutive session of depreciation as the U.S. dollar strengthened following stronger-than-expected September employment data.
According to figures from the Bank of Mexico (Banxico), the exchange rate closed at 18.3892 pesos per dollar, representing a 0.16% depreciation, or three centavos. The peso came under pressure as markets dialed back expectations for another Federal Reserve rate cut at the December meeting.
The U.S. dollar index (DXY), which tracks the greenback against a basket of major currencies, slipped 0.03% to 100.20 points, but remained firm enough to weigh on emerging-market currencies. Traders now see a 34% chance of a December rate cut, down from 49% on Wednesday, according to CME Group’s FedWatch tool.
In Mexico, Banxico released the minutes from its November meeting, where the board voted to cut the benchmark rate by 25 basis points to 7.25%. The minutes noted that board members will approach any future cuts with more caution than in previous months. Banxico is expected to cut the rate again by 25 basis points at the December 18 meeting, bringing it to 7.00%.
U.S. Market
Market enthusiasm surrounding NVIDIA’s quarterly report faded quickly on Thursday, as semiconductor stocks plunged as much as 10% on the Nasdaq.
Investor concerns over lofty valuations in artificial-intelligence-related equities, ambitious growth expectations, and the risk of fewer Fed rate cuts triggered widespread profit-taking. The reversal in NVIDIA, the leading AI-chip maker, dragged the broader market lower.
NVIDIA shares initially jumped 5% after posting stronger-than-expected earnings and issuing an upbeat sales forecast for the fourth quarter. But by the end of the session, the stock had fallen 3.09% to $180.64.
This decline came despite CEO Jensen Huang’s reassurance that there is no tech bubble forming and that chip demand continues to surge. The sector sold off anyway, with the Philadelphia Semiconductor Index (SOX)—which tracks the 30 largest companies in the industry—dropping 4.77%.
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