Talking Points
- USDMXN trades higher but is still in the red for the session.
- Unemployment at 3.6% is the highest in three months.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.
Unemployment in Mexico edged up to 3.6% in January, a 0.2% rise on December’s reading but lower than market expectations of a rise to 3.8%. The USD clawed back some of the session’s losses against the Peso but the Mexican currency still remains vulnerable to further downside pressure from President Donald Trump’s job repatriation vows.
Mexico sends around 80% of its exports to the US and is in the crosshairs of President Trump who has announced that he will bring back millions of job back to the US. The President’s open dislike of the North American Free Trade Agreement (NAFTA) – the low barrier trading arrangement between the US, Canada and Mexico - is likely to see the agreement scrapped or radically re-shaped to the benefit of the US.
In retaliation, Mexico’s economic minister Ildefonso Guajardo said that if the US President sought to impose tariffs on Mexican products, that he would stop negotiations. In a Bloomberg interview, Guajardo stated that the moment the US says that they are going to impose a 20% tariff on cars, “I get up from the table.”
The Mexican Peso has rallied of late after hitting a record low around 22.40 against the greenback on January 20 in the wake of Donald Trump winning the keys to the White House. In an effort to stem further currency losses, and to keep a lid on inflationary pressures, the Mexican central bank hiked rates on February 9 by 50bps to 6.25%, the fourth monthly hike in a row.
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.cawley@ig.com
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