Mexican Peso Strengthens After Labor Data and Jerome Powell’s Comments

Jerome Powell stated that the U.S. economy is stronger than it appeared in September when the Fed began cutting interest rates.

Written by: Ignacio Teson • Wednesday, December 4, 2024 • 1 min read

• Last updated: Wednesday, December 4, 2024

The Mexican peso appreciated against the dollar on Wednesday, buoyed by U.S. labor data and the latest public remarks from Federal Reserve Chairman Jerome Powell ahead of the Fed’s final meeting of the year.

The exchange rate of the USD/MXN ended the day at 20.3001 pesos per dollar, compared to 20.3418 pesos the previous day, according to official data from the Bank of Mexico (Banxico). This marked a gain of 4.17 cents, or 0.21%.

The dollar traded within a range, reaching a high of 20.3870 units and a low of 20.2565. The U.S. Dollar Index (DXY), which measures the dollar against six major currencies, was down 0.05% at 106.31 points.

USD/MXN

Jerome Powell’s Comments

In his comments on Wednesday, Jerome Powell stated that the U.S. economy is stronger than it appeared in September when the Fed began cutting interest rates. This suggests that officials might be able to approach rate changes more cautiously.

These remarks were Powell’s last scheduled public comments before the Fed’s “blackout” period begins on Saturday, ahead of the December 17-18 meeting. Traders still anticipate a 25-basis point rate cut, with a 77% probability according to FedWatch.

Notes from Today’s ADP Report

Today, the Mexican peso aims to maintain its positive trend while awaiting more clarity on the Fed’s future monetary policy cycle, following the release of the ADP payroll data and Powell’s statements. Earlier, the ADP report revealed that U.S. private payrolls grew at a moderate pace in November, adding 146,000 jobs, down from a revised 184,000 in October.

The initial ADP reading showed fewer jobs than expected, prompting traders to speculate on the Fed’s next move. They will be watching labor market indicators for the remainder of the week.

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ABOUT THE AUTHOR See More

Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.