The Mexican Peso (MXN) clocked its lowest level against the US dollar in a year on Friday 2 August 2024. When the final bell sounded, the USD/MXN rate sat at 19.16 and sunk as low as 19.22 at one stage.
Mexican Peso Hits Record Low Against The Greenback
Economists believe that this weakening MXN performance, which typically fluctuates in tandem with USD movements, reflects apprehensions about a sluggish US economy. Risk-averse forex trading saw the greenback gain roughly 4% in the week ending 2 August 2024.
Mexico’s latest data indicates a minor rise in unemployment with minimal changes in gross fixed investments during May 2024. Analysts stated that although this could have affected the peso positively, markets kicked back against July’s US unemployment report, which showed a 4.3% spike in unemployment.
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FXStreet reported that this data, along with the latest US Purchasing Managers’ Index (PMI) demonstrating a 3.51% decrease compared to June 2024, once again kindled recession concerns. This information caused investors to dump “risk-sensitive” forex assets.
Wall Street, however, is clinging to the hope that the US Federal Reserve will cut interest rates by as much as 50 basis points in September 2024. FXStreet reported that others are sceptical about this optimism, and quoted Richmond’s Fed President Thomas Barkin, who referred to an economy that “feels like it’s deteriorating rapidly”.
Mexico’s month-over-month unemployment rate for June 2024 came in at 2.8% and gross fixed investment for May 2024 dropped from 0.8% to 0.7%. The country’s S&P Global Manufacturing PMI for July 2024 was 49.60 as opposed to June’s 51.10, which confirms that the economy is slowing.
